All Forum Posts by: Paul Azad

Seems like they are running a Pawn Shop, homeowners in Austin/Miami/Tampa etc who need cash bad sell a "HomeShare", percentage of their equity in their home for a discount, with a term of 10 yrs, if the homes go up in value as they have since 2011/2012 then NADA gets the original equity already at a premium price plus any appreciation for the total percentage they bought from the homeowner, but since Austin now down 20% in last 12 months and other hot home markets may also continue to fall, and NADA does not engage in price discovery (ie shopping for best value) as they want to obtain a "Market Value - ETF like" of the cities they invest in. They undoubtedly overpaid for the homes which were bought by the least savy homebuyers who have now got into trouble/overleveraged and need to cash by selling a portion of their equity in the first place, thus NADA's positions will likely fall faster than the overall market as they have this intrinsic flaw of no price discovery in their methodology. 

so either NADA makes out like a bandit by fleecing stupid Americans (not a unique business model) or NADA bought overpriced homes near the PEAK, since they just started business in late 2021, and they will incinerate your investment better than Cathie Wood, I'm getting my popcorn ready to watch this %&*@show   :)

Good Luck to you Robert, growing up in the South, i've seen Gay folk suffer an exorbitant amount of unfair and unnecessary discrimination. Seems like a good idea to have a resort/Hotel where LGBTQ people can feel safe and comfortable, without having to travel very far away, but finding funding today with rising rates and shrinking credit will be very challenging beyond any discrimination y'all may suffer in the process. Have you considered creating an investment syndication with you two as General Partners and soliciting Limited Partners from all over the country to fund the purchase/Rehab etc. This way y'all maintain control as GPs and can buy/invest as much of the LP portion as you want or even take 15-20% as your fee for syndicating the deal. If done well you could then do similar syndication models in many other states where there is a likely similar need/market?

either way, good luck with the project, I know WACO and Baylor University in particular, where I do believe they once banned sex while standing as they felt it might lead to Dancing :)

no need to squabble over the charts above, they are actually the same, both by Dr Robert Shiller at Yale, the only difference is that one backs out inflation. Shiller did his PHD at MIT in 60s w fellow student Dr Jeremy Seigel, whose latest edition of Stocks for the Long Run does a deep dive into US inflation, basically we had none from 1809 till 1945, house prices flat, then post WW2, lots of inflation and house prices up, if you remove the inflation, the red line in last chart above, house prices nearly flat again. Almost all real estate historical studies show all real estate appreciates at rate of inflation. The famous Amsterdam study looked at bills of sale for >400 years on canal front homes in Amsterdam, and price appreciation exactly mirrored inflation rate, ie residential real estate or any real estate never goes up in Value only in Price because the currency its denominated in loses its value at same rate. As real estate investors we carefully surf the micro-fluctuations over several years and use leverage to amplify them. 

thanks for posting this, it's amazing - basically took investors money and paid out as dividends to old and existing, just like Bernie Maddoff did, he owned very little unprofitable real estate simply as a fake patina of a business to drive the LPs to invest 

from pg 3 of indictment
"Each investor in the Fund also received a written guarantee from NRIA of an annual return of at least
twelve percent per year for a period of five years plus a full return of their investment, or else any
shortfall would be paid by NRIA."

pg 10

"From the Fund’s inception in or around February 2018, the Defendants, both
individually and through project managers at NRIA, represented to investors and prospective investors
that NRIA was a solvent, profitable business that generated significant cash flow, separate and apart
from investor fundraising. In reality, throughout its history, NRIA generated little or no profits from its
developments, and in many cases lost money."

p16  

"Salzano used this money, much of which was traceable to Fund investors, for an array
of lavish personal expenses, including erectile dysfunction medications, expensive dinners, extravagant
birthday parties, and payments to Individual-4 (Salzano’s wife), Individual-5 (with whom Salzano had
a romantic relationship), and Individual-7 (Salzano’s ex-wife), none of whom worked at NRIA in any
capacity."

the rest of the 44 pages just itemize the crimes, he made fraudulent documents/forgeries etc, to get 2000 investors to put in about 658 million over 4-5 yrs, WOW, i wonder how many other similar PONZIs have been running all around the country, particularly in the growthier multi-family syndications

lots of good threads at the syndicator and fundraiser review thread      would check out the https://www.biggerpockets.com/forums/-syndicator-and-fundrai...

but try to find a syndicator with experience, >20yr so has been through down-cycles, and also one that puts a lot of their own equity into each project, so their interests are aligned with the limited partners , from my research, there are a lot of syndicators whose fee structure tends to incentivize too much risk taking.

Many Multi-family properties now in debt service trouble as the GPs took out very risky 2-3 yr floating rate or adjustable loans so they could cash flow after buying very expensive 3Cap apartments, which loans have gone from 1.5% to 5% or higher, and knowing that obvious and predictable risk since every primate could see mega-inflation coming in early 2021 due to more money printed in 2 yrs than first 200 yrs of country, They "smartly" took out Rate Cap insurance, (cost 50k for a 12 month policy on 10mil loan to cap variable insurance rise about 1-1.5% above the origination level) but now that US 10yr up 10x from 0.31 in 3/2020 to 4.2%, that same insurance policy is 1.5-2.0 million not 50K, so They can't cover the much higher debt service nor buy new cap insurance without shutting down distributions or capital calls. Only solution is hope FED cuts interest rates fast and deep, but all macro-data says US economy doing great with fed funds at 5.33% so foreclosure becoming only option.

now if a Chimp with a learning disorder like me could see this coming, perhaps, the syndicators that charged high fees and had 5 different "share classes" saw it coming too and perhaps that was their plan all along? I think no one should invest with anyone who doesn't put 20-30% of the capital in themselves as a step 1 screening.

Sorry , a bit confused Ms dillon, trying to learn more about syndication, are you bringing 50% of the capital for the down payment to buy the property and your partner the other 50% and they are getting the loan for the debt portion, hence getting 50/50? or if not 50% capital required why wouldn't the other partner just find a realtor and CPA to find/underwrite the deal and 3-5% for property management then own/keep 100%?

John are you only invested in Multi-Family syndications or other classes like office/retail/self-storage/mobile-home/industrial etc? and if so are those classes having distribution suspensions as well?

Chris, agreed, investors need to do far more due diligence. I have many friends who just invest on "word of mouth" or "projected IRR of X%"

Folks should have more  Caveat Emptor in 'em

Hi Melanie, depends on 10 yr note, could continue to go up slowly for next 30-40 yrs as it has done between 45-82 or 1890-1920, or down for 30+ yrs like 1920-1945 or 1982 until 4 yrs ago, if they have 25% down and long term fixed rate debt ( just got a 10 yr loan at 6.95%) and Cap rate >150 Bp above debt rate, they should do fine-assuming good local market, even if value drops 20% short term, it will recover longer term and should be ok. My family bought SFRs in early 80's w mortgage rates >18%, but high inflation drove rents higher than debt expenses so they all cash flowed

also look at USFR, paying 5.37%, holds 8 week Tbill floating rate notes only, not as good obviously as buying Tbill directly at the top of the curve (i bought a 26weeker in late Sept at 5.6%) but much easier to transact, i suspect 10yr will fall over next 2 yrs (FED cycle) then slowly rise over next 30-35yrs (long us debt-deleveraging cycle)