Anybody invested in Ground Floor LROs or Notes?
West palm beach, FL · Member since 2016 · 36 posts · 5 votes
Anybody invested in Ground Floor LROs or Notes?
Most Popular Reply
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
3y@Matthew J.
Recommend join groups like left field investors to find additional sponsors. Also check some broker-dealer sites such as dalmorefg.com who brokers the majority of regulation. A+ offerings
I would not listen to anyone online anyways about what would happen and have an attorney review the offering and subscription agreement.
Typically if a company goes bankrupt the assets are liquidated and what’s left (which is usually not much) it goes to preferred share holders then common share holders.
7e investments53 Reviews
30 Replies
- 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Chris Seveney:
Quote from @Carlos Ptriawan:
The problem with general investor is simple, they do not know what they do not know.
While generating 8% income from note online seems cool, but that's only 15% of the story.
But usually investor only focus on that 15% only while forgetting the rest of 85% that they "do not know".So rather than investing blinding, investor should increase their education level and interact more and more to more established investor.
I agree. Besides education it is also people chasing returns. There is a guy who posts the sam ad here in classifieds that says earn 15-50% in passive investments. Anyone who would even click on that should realize they are probably going to lose all their money. That is one example but people just look at a sponsors targeted returns and think they are actual. They never read anything because "a buddy told them they heard its a good investment" only to find the buddy did not invest but heard from a biggerpockets post which was from the sponsor...
Mortgage note funds are really just syndications instead of buying property they are making or buying notes.. So the success and risk falls back to the sponsor of the fund/syndication.. important to have top shelf company / person running it. Where I saw a lot of the crowd funders go astray when they started HML ing was simply they knew the tech but they did not have account managers that had any real experience or even better a deep rolodex of borrowers.. thats the key U need a deep rolodex of repeat quality borrowers. The other major risk I see compared to buying and holding whole notes in the investors sole name is with the fund investor expect return day one of the money going into the fund.. this business is fluid it might take some time to close a loan so now the fund has drag on the raised capital and if it gets bad enough it becomes a major problem.
I was talking to a BP member he asked me to refer funds to him.. I said I get that if you have limited capital.. his thought was your risk was less as your spread over many loans.. My counter to him was you have the money just go find a great broker and own the whole note yourself so if you do even up with a water landing its just you and the borrower working it out. Just make sure you do good due diligence on the asset and borrower.. So he did that bought two whole notes through a reputable Broker in the market he LIVES in.. sent me pictures of the home he drove by and checked out personally.. I think all in all thats a very safe play and I think he got a coupon of about 11 or 12% for a one year fix and flipper with a good amount of equity protection in a super strong MSA.
When I had my HML company in Oakland CA.. We did most of our loans as fractional so even though we had multiple investors on each note the investor was named on the note so they could not end up in a huge pool if there was an issue.. in CA you can fractionalize up to 10 investors in one note without doing any securities offering you just need a RE broker ( which I am ) to do your paper work. WE had 250 clients and this is the late 80s and about 300 million we worked with all SF bay area transactions. - West palm beach, FL · Member since 2016 · 36 posts · 5 votes3y
This is the question I asked to Ground Floor. "Who will get paid first in the case of Ground Floor bankruptcy? Notes or LROs?". Their answer was "To clarify, Notes are secured by the Company's assets and LROs are secured by real estate. In an event of bankruptcy, LROs would be paid off by the real estate and Notes would be paid off with the Company's assets.
There is no preferential treatment to either - there is no order of payment. Thank you"
So what do you think? LROs or Notes are safer?
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
Quote from @Matthew J.:
This is the question I asked to Ground Floor. "Who will get paid first in the case of Ground Floor bankruptcy? Notes or LROs?". Their answer was "To clarify, Notes are secured by the Company's assets and LROs are secured by real estate. In an event of bankruptcy, LROs would be paid off by the real estate and Notes would be paid off with the Company's assets.
There is no preferential treatment to either - there is no order of payment. Thank you"
So what do you think? LROs or Notes are safer?
I would much rather hold a secured note vs. an unsecured LRO. First sentence from one of their offerings: THE LRO's will be unsecured....
The LROs will be unsecured special, limited obligations of the Company. The LROs are not listed on any national securities exchange or on the over-the-counter inter-dealer quotation system. There is no market for the LROs. Our obligation to make payments on a LRO is limited to an amount equal to each holder’s pro rata share of amount of payments, if any, actually received on the corresponding Loan, net of certain fees and expenses retained by us. See the sections titled “General Terms of the LROs,” “The LROs Covered by this Offering Circular,” and “Project Summaries” of the Offering Circular, as amended hereby, for the specific terms of the LROs covered by this PQA.
We do not guarantee payment of the LROs in the amount or on the time frame expected. The LROs are not obligations of the Borrowers or their Principals, and we do not guarantee payment on the corresponding Loans. We have the authority to modify the terms of the corresponding Loans which could, in certain circumstances, reduce (or eliminate) the expected return on your investment. See the “General Terms of the LROs—Administration, Service, Collection, and Enforcement of Loan Documents” section on page 106 of the Offering Circular.
The LROs are speculative securities. Investment in the LROs involves significant risk, and you may be required to hold your investment for an indefinite period of time. You should purchase these securities only if you can afford a complete loss of your investment. See the “Risk Factors” section on page 12 of the Offering Circular.
Generally, no sale may be made to you in this offering to the extent that the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(c) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.
7e investments53 Reviews - Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
Quote from @Chris Seveney:
Quote from @Matthew J.:
This is the question I asked to Ground Floor. "Who will get paid first in the case of Ground Floor bankruptcy? Notes or LROs?". Their answer was "To clarify, Notes are secured by the Company's assets and LROs are secured by real estate. In an event of bankruptcy, LROs would be paid off by the real estate and Notes would be paid off with the Company's assets.
There is no preferential treatment to either - there is no order of payment. Thank you"
So what do you think? LROs or Notes are safer?
I would much rather hold a secured note vs. an unsecured LRO. First sentence from one of their offerings: THE LRO's will be unsecured....
The LROs will be unsecured special, limited obligations of the Company. The LROs are not listed on any national securities exchange or on the over-the-counter inter-dealer quotation system. There is no market for the LROs. Our obligation to make payments on a LRO is limited to an amount equal to each holder’s pro rata share of amount of payments, if any, actually received on the corresponding Loan, net of certain fees and expenses retained by us. See the sections titled “General Terms of the LROs,” “The LROs Covered by this Offering Circular,” and “Project Summaries” of the Offering Circular, as amended hereby, for the specific terms of the LROs covered by this PQA.
We do not guarantee payment of the LROs in the amount or on the time frame expected. The LROs are not obligations of the Borrowers or their Principals, and we do not guarantee payment on the corresponding Loans. We have the authority to modify the terms of the corresponding Loans which could, in certain circumstances, reduce (or eliminate) the expected return on your investment. See the “General Terms of the LROs—Administration, Service, Collection, and Enforcement of Loan Documents” section on page 106 of the Offering Circular.
The LROs are speculative securities. Investment in the LROs involves significant risk, and you may be required to hold your investment for an indefinite period of time. You should purchase these securities only if you can afford a complete loss of your investment. See the “Risk Factors” section on page 12 of the Offering Circular.
Generally, no sale may be made to you in this offering to the extent that the aggregate purchase price you pay is more than 10% of the greater of your annual income or net worth. Different rules apply to accredited investors and non-natural persons. Before making any representation that your investment does not exceed applicable thresholds, we encourage you to review Rule 251(d)(2)(i)(c) of Regulation A. For general information on investing, we encourage you to refer to www.investor.gov.
unsecured mentioned 2x in this agreement:
7e investments53 Reviews
Join the conversationCreate a free account to reply, vote on answers and follow this thread.