I selected "Horror Stories" from the Bigger Pockets dropdown mostly because I feel like this is about to become one (just in time for Halloween? cliche but true). Please allow me to give you the backdrop to cue up the story.
In 2024 I invested a large sum as an accredited investor to Ashcroft's "Income Note". My confession is I thought I was savvy, moving up from a double-digit single family portfolio to a Note Investor in a large commercial real estate company, who seemed to be the darling child and nowhere to go but up. Who doesn't want 10+% cashflow every month?? It was great until it wasn't.
I'll leave everyone hanging on the clincher because this is an ongoing tale.
What I'd like to know is - Has anyone else invested in the "Ashcroft Income Note" or other Ashcroft related syndications? They have signed documents promising repayment, sent emails promising explanation for non-payment, and have failed to respond to multiple attempts at contact for a long time now. As of this date, the promises go unfulfilled and communication is dark
Sound scary, well syndications can be that way.
I'm looking to find other investors who may have fallen into the same trap. Please reach out if you have had any dealings with Ashcroft Capital, positive or otherwise... I'd like to talk.
I’m sorry you’re dealing with this. Having a significant investment outstanding and struggling to get answers is understandably stressful.
I found what appears to be an accompanying pitch deck online, and looks to me like an unsecured loan unless the actual investment documents establish otherwise. It describes providing “working capital” and specifically lists “operational shortfalls” and “rate cap purchases” among the uses. It also says the notes rank ahead of common equity, but that alone does not establish a recorded lien or collateral securing repayment.
I think syndicators have become increasingly clever with how they describe investments. Terms like “note,” “preferred return” and “bond” can create a sense of security, particularly for investors who associate a note with a mortgage. The label itself tells you very little about your actual protection.
It’s important to obtain the private placement memorandum, operating agreement or any note or security agreements applicable to the offering. Those documents control your rights, rather than the advertisements. Too few investors thoroughly read or understand what they are investing in.
There’s nothing inherently wrong with a fixed return or a cap on upside. Personally, when investing through an equity structure, I generally want the vehicle holding the LPs’ investment to be a direct member of the entity that owns the property, with that entity’s operating agreement clearly establishing the LPs’ repayment priority through a preferred return or distributions that substantially favor them. All investments carry risk, but it makes the connection to the property and repayment structure clearer whereas many of these "notes", "preferred returns" and "Bond's" are truly unsecured. I often see conflicting language between the underlying real estate entities operating/partnership agreements and the ability to take on senior debt.
The stated uses make this sound like rescue capital to me. Was the money needed to complete renovations and stabilize otherwise viable buildings, or to cover ongoing deficits because rents fell short of projections or operating expenses were underestimated? Those are very different situations.
Did you ever review the financials for the individual properties, leverage figures and the underlying loan terms before investing? If not, I would request them now, along with an accounting of where the note proceeds went. Understanding the portfolio’s performance, debt maturities and remaining equity would help you assess the prospects for repayment. Although failing to respond to recent inquiries is quite concerning.
I help GP's with SEC compliance as well as assist LP's with diligence and understanding investment opportunities before committing capital. Reach out in the future before making an investment, happy to assist and make sure you're adequately informed before making an investment.
I’m sorry you’re dealing with this. Having a significant investment outstanding and struggling to get answers is understandably stressful.
I found what appears to be an accompanying pitch deck online, and looks to me like an unsecured loan unless the actual investment documents establish otherwise. It describes providing “working capital” and specifically lists “operational shortfalls” and “rate cap purchases” among the uses. It also says the notes rank ahead of common equity, but that alone does not establish a recorded lien or collateral securing repayment.
I think syndicators have become increasingly clever with how they describe investments. Terms like “note,” “preferred return” and “bond” can create a sense of security, particularly for investors who associate a note with a mortgage. The label itself tells you very little about your actual protection.
It’s important to obtain the private placement memorandum, operating agreement or any note or security agreements applicable to the offering. Those documents control your rights, rather than the advertisements. Too few investors thoroughly read or understand what they are investing in.
There’s nothing inherently wrong with a fixed return or a cap on upside. Personally, when investing through an equity structure, I generally want the vehicle holding the LPs’ investment to be a direct member of the entity that owns the property, with that entity’s operating agreement clearly establishing the LPs’ repayment priority through a preferred return or distributions that substantially favor them. All investments carry risk, but it makes the connection to the property and repayment structure clearer whereas many of these "notes", "preferred returns" and "Bond's" are truly unsecured. I often see conflicting language between the underlying real estate entities operating/partnership agreements and the ability to take on senior debt.
The stated uses make this sound like rescue capital to me. Was the money needed to complete renovations and stabilize otherwise viable buildings, or to cover ongoing deficits because rents fell short of projections or operating expenses were underestimated? Those are very different situations.
Did you ever review the financials for the individual properties, leverage figures and the underlying loan terms before investing? If not, I would request them now, along with an accounting of where the note proceeds went. Understanding the portfolio’s performance, debt maturities and remaining equity would help you assess the prospects for repayment. Although failing to respond to recent inquiries is quite concerning.
I help GP's with SEC compliance as well as assist LP's with diligence and understanding investment opportunities before committing capital. Reach out in the future before making an investment, happy to assist and make sure you're adequately informed before making an investment.
if I was betting on this I think your correct rescue capital all thrown into a big bucket to try to plug leaks.. seen this show before I sure hope AShcroft can find a way to solve their issues.. but one thing does not help any syndicator and that is going dark on communications .. all this does is lead to SM posts and some not very nice posts about being scammed etc..
There are several funds out there that pop up as "income funds" that are nothing more than capital for their failed deals because they could not get investors on the capital call. As someone who runs a note fund, they are not simple to run or manage, and if you do not have experience in the space, it can come back to bite you.
In instances where they are lending to one of the other funds (not saying this is or any the case as I have not read the Ppm and is this response is general in nature) the reality is they don't need experience because they appear to be just popping up a fund for liquidity on their other funds' unaffiliated transactions. If disclosed in the offerings, there's nothing wrong with that. Investors need to do due diligence to understand the capital stack and where the money is being invested.
Dang. My 'best advice ever' would be to stick with marketable securities for stability and liquidity if just seeking 10%+ yields with no or low tax advantages from equity ownership. There are many.
Thank you all for adding your input. It is kind to say "clever" but that is really what it is, if not sneaky, the way they market something like an unsecured promissory note so similar to a secured note. Indeed, according to their subscription agreement, that is all it is - just a promissory note with no specific property as collateral. I believe I am in line for distributions before LP's, but that only puts me in a lower pool than priority lenders and not in the same position as a true note. I have requested financials but have not received any. Ashcroft was sending quarterly reports of their usage of the funds but that stopped about a year ago.
I fear the same as what you all have suggested - rescue capital that has not been enough to save a sinking ship. I truly hope they can make this whole but my faith in that is not high at this point. I have read other forums about this group all pointing to the same conclusion - Ashcroft is going under fast.
I only posted here for 3 main purposes. One was to see if I could find any other investors in the same boat as I in case we need to exert our rights in the Subscription Agreement. Second was to make new investors to syndications aware of the "clever" advertising for funds going on. Lastly, my conclusion that nothing beats control over your own investment. When you own a property outright, you are in the driver's seat and all failures are your own. You can change your course and solve problems. When you hand your money over to REITs, syndications, and pooled funds, no amount of due diligence can put you back in that driver's seat.
I risked a chunk of capital trying to grow beyond SFR, some of it was treated well (e.g. - Brian Burke's team at Praxis), some was not. Be careful out there if you are thinking of relinquishing control of your hard-earned dollars to a 3rd party. Again, anyone in the same boat, feel free to reach out.
I wouldn’t call it sneaky. The materials spell out how the proceeds will be used and that the investment is simply an unsecured loan. The terminology is intended to attract people who don’t take the time to read what they’re investing in and instead rely on name recognition and the appeal of a fixed return.
I also disagree that direct ownership necessarily produces better results. A sound investment thesis, conservative leverage, conservative underwriting and an experienced GP will outperform a novice who owns their own real estate more often than not. The challenge is that the novice rarely knowns how to effectively pick their investment opportunity and jockey.
Hi Steven, sorry to hear about this. And @Stuart Udis covered the structure side well. One piece nobody's hit yet: how a loss on something like this actually comes back on your taxes, which is different from losing on equity.
Because this is debt, not an LP interest, the loss runs through the worthless-debt rules, and which one depends on the paper. If the note isn't a registered-form security, it's a nonbusiness bad debt under §166, treated as a short-term capital loss. If it is in registered form (worth checking in the docs), it falls under §165(g) instead, and held more than a year it's a long-term capital loss. Either way a few things hold:
- It's all or nothing. No partial write-down while any piece is still recoverable. You take it the year the debt is wholly worthless, backed by an identifiable event, not just missed payments or silence. A recent Ninth Circuit case made the point that nonpayment alone doesn't prove worthlessness, the burden is on you to show it.
- It's a capital loss, so without capital gains to absorb it, it only offsets $3,000 of ordinary income a year. A large note loss can take years to actually use.
- One fork worth watching: if this turns out to be outright fraud rather than a deal that just failed, theft-loss rules can treat it as an ordinary loss, which is a materially better outcome. Different analysis, but keep it in mind as the facts develop.
So while you're chasing financials and other noteholders, it's also worth pinning down the worthlessness year and the event behind it. That record is what protects the deduction later.
Hoping everything turn out well and this stays hypothetical.
When considering a fixed rate or preferred return investment connected to a real estate syndication, I ordinarily advise my clients to seek opportunities where the fund accepting their money is a direct, admitted member of the underlying property ownership entities.
For example, if 1 Main Street Development LLC owns 1 Main Street and 2 Main Street Development LLC owns 2 Main Street, I want the fund capitalizing those properties to hold a membership interest in both LLCs. I also want its preferred return and repayment priority expressly recognized in those entities' operating or partnership agreements.
If I represent someone whose capital is first in the door, I want to understand whether another class can subsequently be admitted with priority repayment or distribution rights. If I represent a later investor being promised priority, I want to confirm that the underlying agreements actually recognize that position. I have also seen initial and later classes share distributions pari passu. In those circumstances I want to better understand how the new class/capital benefits all member interests and ordinarily look to leverage and capital's intended use and how its supposed to benefit the underlying real estate. If its capex or expansion of an already successful investment strategy that's very different than capital being used to plug holes. Whatever the arrangement, I want my clients to understand where they stand.
I also find it easier to ensure enforceable restrictions on how the money can be used, along with reporting rights that allow investors to follow where it goes when the fund is a direct admitted member of the underlying real estate entity. Overly permissive language in the operating or partnership agreements would itself be a red flag for me. When the fund investor money flows through is completely detached from the real estate its more difficult to trace what the money is being used for with far less reporting access to how the underlying real estate is actually performing.
@Kasing Ng To connect this to your tax point, assume the fund vehicle that the investors capital flows through is an admitted equity member of the underlying property entities. Could losses allocated through that structure have a different character or become deductible at a different time than if the fund is not a direct member to the underlying real estate?
