Equity Build LLC feedback?

[Barry Armstrong]

Wondering if any forum members have recent experience with Equity Build, equitybuild.com? They work mostly in Chicago, rehabbing multi unit properties and single family homes using multiple investors to provide capital, and advertise high rates of return.

Thanks for any feedback!

[Jay Hinrichs]

@Bob Malecki  at the level we do mortgage pools or pooled investments.. even though there are state and fed regs.. these are UNREGISTERED securities.. and as such .. the only over sight is if you don't do it correctly and get your hand slapped or worse.. so there is no sense of protection up front for investor.. just punishment for the sponsor if they don't do it right.. that does not get the investors their money back in the case of a melt down. 

In a fractionalized situation.. at least as to my experience doing them in CA.. ( many states they are not legal) like in Oregon its not legal). 

The issue comes in the foreclosure process were each beneficiary needs to sign the documents to allow the trustee to prosecute the foreclosure.. if you have a hold out it can lead to a stand still.. ( never good). As it relates to investors.. being in deals with people they don't know.. this can manifest itself into all sorts of problems if the sponsor goes under or walks away.

In simple terms you don't know who the other investors are. you have a copy of their assignment ( if its recorded) if its not then you have NO way of knowing who your other partners are. 

then anytime you get a group of non sophisticated investors in on one deal with no clear leadership this leads to all manner of confusion... One wants to Sue.. one wants to walk.. one thinks the property is worth double and won't sell.. etc etc.. Again why state of CA came out with a clearly defined disclosure document about this..

End of the day regardless of what method you use to invest in notes.. it comes down to the collateral.. it comes down to the owners or sponsors.. And especially when In essence your doing rehab lending which is what it appears to me from post on BP that others are doing with respect to these EB transactions.. and according to the owners they have ran into bad contractors bad real estate people. etc.. its not like our buying a NOTE on a performing rehabbed asset.. as YOU know rehab lending is the most risky you can do.. short of buying non performing seconds and paying too much for them because you did not understand the value of the collateral or all that goes into securing the collateral... Note to mention IL is a bear to foreclose in.. Very expensive and time consuming.  And the city of Chicago has to be one of the top 5 toughest places to rehab.. I know this by personal experience and will never do deals there again on the rehab side... I can fully understand why projects in that city get all buggered up.. its happened to me..