Anyone invest with Nighthawk Equity?

[Pat Quinn]

Has anyone invested in apartment building partnerships with Nighthawk Equity?  If so, what your experience like?

Thanks

[Jesse Meyer]

In case anyone else finds this thread, a word of warning about Nighthawk or any other large syndication firm with an associated social media influence. 

Media personalities (Nighthawk Equity/Micheal Blank, Rand Partners/Jake and Gino, Rod Khleif, Simple Passive Cashflow/Lane Kawaoka, etc..)will use their influence to build their brand/name first. Objectively the process works like this:

1. Use their media (podcast, blog, etc.) to pool capital from listeners/viewers to gain access as GP on deal
2. Create equity group as a standalone business
3. Transition to a syndication coaching service 
4. Use coaching service (students) to bring deals to the equity business

Where an investor needs to be careful (I invested with one of the above), is how this translates to risk the LP takes on when they partner with the equity business. In my deal I thought the track history of multimedia personality would equate to lower risk on my first syndication investment. Not the case. Quite the opposite. 

What I know believe to have happened is that a coached student brough the deal to the "face" of the equity group. Then the teacher, experienced member, face of the group will present it to investors as a deal they stamp their name and reputation on. What really happens is that seasoned GP members are there in name only. The inexperienced member(s) of the general partnership that brought the deal are left to manage the deal. The more experienced general partners see this as passive income stream. The general partners are not active in the deal post closing, they are there only to advise when things go wrong. 

And wrong they went for my deal. I won't name the company but holding group I partnered with held over 75M and 2000+ doors before I decided to jump in with them. Here is a list of the issues that transpired with my deal:

• They pushed Closing date multiple times. Leaving investment money dead for two months by not doing anything.
• First distribution was one month behind
• First distribution was severely under Pro Forma (5K in utility overage)
  First quarter operation saw overages in CAPEX (Pro Forma was off 10x actual figure)
• Second and possibly third distributions canceled due to more utility and CAPEX overages (issue is still not resolved with property)

Initially, I thought this was just bad luck, and I acknowledged this kind of risk when I signed up for it. Now, I have changed my mind. The syndication now admits proper due diligence before closing was not done (they got ONE bid for repair work on a multimillion dollar property!). And they are in no rush to solve the issue. I'll tell you why. 

It doesn't affect the general partners. Not one bit. Most syndications will advertise decent COC returns (mine was 7% at aquisistion moving towards 10% when property is unloaded) for the LPs and GPs get their cut on the exit. For my deal the occupancy is at 100%, reno is on schedule, rents are getting pushed, and capex items are getting addressed. Great for when the property is sold (again for GPs not LPs). But the mis-management hurts the LPs on the path to 5 year hold and release. My 7% (said to be a conservative figure) COC is now an actual 1.6% after one year. 

I would have made more money by just putting my money in a online high yield savings account. 

Maybe my experience is not typical, and I hope so but Bigger Pockets needs more truth on real estate. Even if you work with a team, some memebers will get the short end of the stick while others will profit exponentially more.