Investing in Norada Funding's notes

[Chris Yeung]

Has anyone in the BP community dealt with Norada funding? This is a sister company of Norada Real Estate. They're opening up some investment opportunities for 24 months. Rates are pretty high (12-15% with an additional 5% of the loan paid at maturity). The minimum investment is 50K. 

[Marco Santarelli]

Quote from @Michael Fish:

I, too, am interested in investing with their promissory note option. However, it seems extremely high risk as, to my knowledge, it is unsecured and only backed by a 'promise' to repay not any hard assets or relevant collateral.  

  

Hi Michael,

Just to quickly address your comment here... The Norada Capital promissory notes do offer a high rate of return (interest), but I would not classify them as "high risk" because of the higher interest rates.

To correct your comment, they ARE backed by hard assets and collateral. Our fund includes a portfolio of over 15 companies that form the foundation behind the Notes. You can find more information on the website at or you can contact one of the Investment Counselors for more detailed information.

Continued success,

 
Marco Santarelli
Norada Capital Management 
Norada Real Estate Investments
(800) 611-3060
NoradaCapital.com
NoradaRealEstate.com
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Your Premier Source for Turnkey Cash-Flow Investment Property

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[Michael Fish]

I see. Thank you for letting me know more details about the opportunity. 

[Jose Perez]

Good morning Mr. Santarelli,

Does your company have any multi-family dwellings available for this program you offer, or is it all SFR? With interest rates climbing gradually and the "potential" for a recession, the need for housing is still at an all-time high and people are choosing apartments for several reasons. Take southern California as the example. Homes prices are still at record highs, some decreases-depending on the city, however, high density apartments are skyrocketing. Your thoughts?

Jose

[Norman Schultz]

Mr. Santarelli - I'm interested in getting started in promissory note investing. I'm in the general due diligence phase, i.e. determining if I really want to do this at all. The SEC wars against prommissory note scams here: https://www.sec.gov/investor/p... Could you address a few key points with respect to Norada? Specifically:

1. Are your investments registered with either the SEC or with the California Department of Financial Protection & Innovation?
2. Who at your firm is licensed to sell securities?

3. What is your note default rate?

Thanks in advance.

[Joe R.]

Anyone have experience with Norada Capital Management on Promissory notes?

[Adam Terneus]

@Chris Yeung did you end up investing with Norada? Curious on your experience.

Thanks!

[Adrienne Schwartz]

Quote from @Norman Schultz:

Mr. Santarelli - I'm interested in getting started in promissory note investing. I'm in the general due diligence phase, i.e. determining if I really want to do this at all. The SEC wars against prommissory note scams here: https://www.sec.gov/investor/p... Could you address a few key points with respect to Norada? Specifically:

1. Are your investments registered with either the SEC or with the California Department of Financial Protection & Innovation?
2. Who at your firm is licensed to sell securities?

3. What is your note default rate?

Thanks in advance.

 I would be interested in these questions as well. Also, you have brands like Radio Shack and Dress Barn in your portfolio which are not necessarily expanding brands. Are those still profitable businesses?

[Marty Summers]

Quote from @Adam Terneus:

@Chris Yeung did you end up investing with Norada? Curious on your experience.

Thanks!

 I would also like to know as I just found Norda Capital.  What is the risk here?  With interest rates rising, has Norda seen more defaults recently?  Does our money get spread across multiple notes in a fund?  

I'm gonna have a call with Norda....

[Tomasz Zalewski]

for some of us "regular folks", a tidbit of info here to lower the appetite if you are not in that class of investments:

"Regulation D, Rule 506(c)" refers to a specific exemption under the U.S. Securities and Exchange Commission (SEC) regulations that allows companies to sell their securities without having to register the securities with the SEC. This rule is part of the Securities Act of 1933, which was established to provide more freedom for businesses to raise capital while still protecting investors.

Here are the key aspects of Regulation D, Rule 506(c):

Rule 506(c) Filing:

• Allows issuers to broadly solicit and generally advertise an offering, provided that all purchasers in the offering are accredited investors.
• Requires issuers to take reasonable steps to verify that the purchasers of the securities are accredited investors.
• Issuers must still file a "Form D" with the SEC after they first sell their securities.

The rule effectively lifts the prohibition on general solicitation and advertising for certain investment offerings, allowing companies to reach a broader audience when seeking investment.

Accredited Investor Definition:

To become "accredited," an investor must meet certain defined criteria regarding income, net worth, professional experience, or size of the entity (if the investor is an entity rather than an individual). As of my last update in April 2023, the definition of an accredited investor includes, but is not limited to, the following:

1. Income: Individuals who have had an income of more than $200,000 (or $300,000 together with a spouse) for the past two years and expect the same for the current year.
2. Net Worth: Individuals with a net worth exceeding $1 million, either alone or together with a spouse, excluding the value of the person's primary residence.
3. Insiders: Directors, executive officers, and general partners of the company selling the securities.
4. Professional Experience: Certain professional certifications, designations, or credentials or other credentials issued by an accredited educational institution may allow an individual to be considered accredited.
5. Knowledgeable Employees: In the case of private funds, "knowledgeable employees" of the fund are also considered accredited investors.
6. Institutions: Banks, partnerships, corporations, nonprofits, and trusts with assets exceeding $5 million.

By imposing these criteria, Regulation D is meant to ensure that all participants in such an offering are capable of fending for themselves or sustaining the risk of loss, thus requiring less regulatory protection.

Under Rule 506(c), it is not enough for an investor to simply claim accredited status. The company making the offering must take reasonable steps to verify that an investor is accredited, which may include checking financial statements, tax returns, or receiving confirmation from a broker-dealer, attorney, or certified public accountant.

These regulations reflect a balance between making capital more accessible for businesses and protecting investors from risks associated with unregistered securities. It's important to note that SEC regulations can evolve, so for the most up-to-date information and advice, you should refer to the latest SEC releases or consult a legal professional.

[Donna Johnson]

Again, anyone have an update on their success or lack there of with NORDA investing in 2024?

[Zach Jambor]

Seems like this thread has unfortunately dried up a bit! I have only had an initial consultation with a Norada Real Estate Investments consultant and have not moved forward with actually purchasing a property. Though my experience is quite limited with Norada, my consultant Melissa has thus far been quite helpful in answering my questions. Naturally, every answer breeds more questions, but she has been patient and responsive. Some of the negative reviews I've read on Norada (not necessarily on BP) seem to stem from not understanding Norada's responsibility in helping you meet your investment goals, nor in yours once the purchase contract is complete. I will say that some of the listing prices and projected rents seem high when comparing against my own research. I'm still optimistic, but will ensure I do my due diligence to protect my investment.

[Donna Johnson]

Thanks for your input, Zach!  Let us know if/as you get new information.  

[Paula Impala]

I invested in Norada Capital Management and was coming here to connect with others who may have invested.  Did not receive my payment from Norada this month and just received the following notification in my email. 

Any recommendations from fellow inv

Dear Valued Investor,

I hope you are well. As a lender (aka “Maker”) to Norada, you are a valued member of the Norada family.
The purpose of this correspondence is to provide you with an update on the repayment under the terms of the promissory note (“Note”) as an obligation of Norada Capital Management, LLC (“Norada”).
As with all businesses, Norada is subject to market factors that could impact its ability to make payments. Due to current market conditions and unforeseen financial challenges, we have decided to temporarily suspend distribution payments. This decision was not made lightly and comes after thorough deliberation and analysis of our current financial position.
This requires us to exercise our right to convert your Note and issue equity (aka membership interests) in Norada. You will recall that your Note allows Norada to convert the outstanding balance owed into equity and that it can redeem that equity in the future by repayment of the Note principal in full. There is nothing required by you related to your Note being converted. It happens automatically upon notice being sent.
As such, this email will provide you notice that Norada has chosen to exercise its right under the Note §6 to issue equity to you in Norada. Your equity is valued at the unpaid face value of the Note plus any accrued but unpaid interest. We expect to be in a position to redeem your interests in short order, and we will keep you posted, as always, on any developments in this regard.

We understand the importance of distributions to our investors and recognize the impact this decision may have on your financial planning. Please be assured that this suspension is temporary. We are committed to resuming regular distributions as soon as our financial situation stabilizes and improves.

Our primary goal is to ensure the long-term stability and sustainability of our business. By temporarily halting distributions, we can preserve capital, manage our resources more effectively, and invest in key areas that will drive future growth and profitability.

In the interim, we are taking strategic steps to strengthen our financial health, including cost-reduction measures, revenue-generating initiatives, and debt restructuring options. Our management team is dedicated to navigating through these challenges and emerging stronger.
We greatly appreciate your understanding and patience during this time. We remain committed to transparency and will keep you informed of any significant developments. If you have any questions or need further clarification, please feel free to contact me directly. (I will do my best to reply to your email in a timely manner.)
Thank you for your continued trust and support.
Sincerely,

Marco SantarelliFounder & CEONorada Capital Management

[Judy Foster]

we too have tried a small investment in their notes and we got the same letter yesterday.  until that time, they had been paying 12% as promised.

[Paul Azad]

Quote from @Judy Foster:

we too have tried a small investment in their notes and we got the same letter yesterday.  until that time, they had been paying 12% as promised.

 Hi,Judy, Norada Capital Management has been engaging in some higher risk ways of obtaining yield from what I've been able to gather from their website and researching them on Google. (e-commerce company that was looking into bankruptcy last year, mastermind businesses, putting on broadway type musicals, including one about Neil Diamond) Their website is fairly opaque as to how they generate their profits in order to pay note investors the very high yields they offer, 14-23%. Please check out this other thread on bigger pockets. about this issue. https://www.biggerpockets.com/forums/960/topics/1196567-nora...

Promissory notes in general, as they have no collateral, seem a bit higher risk, perhaps mortgage note investing which are backed by residential and sometimes even commercial real estate would be a safer alternative, and yet very lucrative, too,  8-12% yields

For extra returns, I put a small portion of my portfolio into BDCs, Business development companies, that specialize in loaning money to growing businesses which are too high risk to get loans from proper banks. So they can get much higher yields on those loans which they pass out to us stockholders in the form of dividend distributions. Over the past two years I've been averaging around 25 to 30% on these, a year since as interest rates Rise this causes an increase in the BDC's net interest margin or profits, so you get capital appreciation of the stock price plus 12 to 14 per cent year dividends paid out. Once interest rates start to head South will switch from BDC's to mortgage REITs whose underlying loan assets (agency debt) will increase in value as interest rates fall and should also generate 20 to 30% yearly returns. Since all these Companies are publicly traded, you can read their yearly 10K'S and quarterly 10q reports. which are very transparent as to how they generate their profits and what risks their seeing on the horizon. I'm also a bit afraid we may be going into a recession soon, so now buying lots of EDV (20-30yr US treasury Bonds, which will go up in value by 30% for every 1% drop in 30yr bond rate) Good luck.

[Donna Johnson]

Quote from @Judy Foster:

we too have tried a small investment in their notes and we got the same letter yesterday.  until that time, they had been paying 12% as promised.

 Judy and Paula,  can you share how long have you been investing with them before receiving this notice?

[Judy Foster]

Quote from @Donna Johnson:

Quote from @Judy Foster:

we too have tried a small investment in their notes and we got the same letter yesterday.  until that time, they had been paying 12% as promised.

 Judy and Paula,  can you share how long have you been investing with them before receiving this notice?

We invested last year and received payments every month even in June.

[Donna Johnson]

Thanks Judy, hopefully they will get back on track with their investors.

[Jon P.]

Just posted this on another thread about this.  Seems to be more coming through the woodwork on this...

--

How in the world is anyone being optimistic about this situation? I'm guessing because most newbies have never gone through a situation where they invest in unsecured notes (if we can even call these notes) and they stop receiving payments. This has disaster written all over it. This is just the start of a larger decline in a company raising money from investors without proper SEC fillings that is starting to not pay investors back. It's crazy to me that people don't even know where their funds were invested. This is a real estate company that doesn't even hold these funds in real estate? How does that make sense? They invested in declining businesses with unrealistic returns. Radio Shack? Come on! Shouldn't they be recommending people invest in real estate?

If they talk about "halting distributions" to investors to focus on future business growth and profitability, what is their actual business plan? If you now have equity in the business, shouldn't you be entitled to see that? I would be pressing the owner for that! Shouldn't you be entitled to actual reports for the business seeing transparent financials along with understanding exactly what your equity position is? Doesn't sound like any of this has been provided. Seems like the "equity" you get is just a cop-out excuse to not pay you. Who's to say this company doesn't just file bankruptcy or the founder disappears with everyone's capital. I've seen that before time and time again. My two cents, anyone that invested in this needs to kiss their money goodbye. In an unsecured investment, you literally have no recourse to get your money back. I would be hiring an attorney to be first in line for any distributions that do come as it's literally first come first serve for people that file suits and obtain judgement first. If you don't do that in time or are way down on the list, the likelihood of receiving any capital back is slim to none...

Here are the key takeaways here that appear to be the most concerning. I have been on their email list for years now and seen these offering, so I am familiar with them, but I did not invest once I learned what the money was actually invested in, which seemed ridiculous!

-Proper SEC guidelines/filings were not followed to raise capital from a large group of unaccredited investors. This is a big legal issue that may weigh in favor of the investor. Probably some predatory or fraudulent activity here that should be investigated.

-Most importantly, this are unsecured investments. Note to new investors, stick to actual RE investing, and never lend money to someone that is not secured.

-These investments were not even invested in real estate by a real estate company, things like failing companies, crypto, etc. Did people not know what they were actually investing in? Dress Barn & Radio Shack...what??

-No concrete business plan, financials or actual equity shares are being disclosed to investors, which need to be. "Equity" seems pretty worthless in a private company that can't make payments.

-This is the strangest investment opportunity I have seen offered. In true syndications, a sponsor shares all financials and will do a capital call if market conditions dictate more capital is needed.

-Basically it appears they have run out of money to pay investors back. Nothing has changed or will change soon economically, so I have no idea how they are going to pay anyone back. Get a judgement as quickly as you can. This may turn into a class action suit, but I think it's better to even be first to the punch before that.

My recommendation is that you be first in line to hire an attorney to attempt to get part of your funds back. Otherwise you are left sitting on the sidelines waiting and hoping, which I have never seen do good for anyone.

Strange how I keep getting their emails to still invest in these funds. How are they still advertising this? Additionally, last week I received this email from them as well...seems like a rob Peter to pay Paul scenario...none of which sounds good...

Secured Note | 17% Interest | 12 Month Term

My partners and I are raising $5 million of short-term expansion capital for the Money Is Mastermind, our exciting and profitable growing business. We have roughly 1,900 paying members with a current valuation of $43 million. We are cash flow positive and project a profit of over $6 million this year. We are only looking for a small number of investors. Here are the terms: 12-month term 17% Interest (Annual) Quarterly interest payments Secured by equity (not real estate-based) $250k minimum investment First-come basis Feel free to book a short 10-15-minute call if you're interested in learning more. Marco Santarelli Partner, Money Is Mastermind

Here is their marketing email about the original fund I am still receiving:

In today’s volatile market, I want to discuss inflation and some ways you can beat inflation to help you grow your wealth and boost your passive income with a focus on our investment fund, Norada Capital Management.

I'm hosting a live webinar this Thursday, April 11th at 11 am PST (2 pm EST).

In this live webinar we will discuss:

• How does Norada Capital mitigate risk in this environment?
• How can Norada Capital pay a fixed 15% yield to investors?
• How long has Norada Capital been offering notes?
  
• What businesses does Norada Capital invest in?
• How does the fund work?

I will send out the live webinar link one hour before the live event so keep an eye out on your inbox!

[Ian M.]

@Jon P. I got that same email the other day about the 17% interest note and thought the same thing. I was shocked to see that given that they stopped paying on their other notes...unless its as you said, pay old investors with new investor money. There's a name for that I think. I don't want to cast stones unnecessarily though and am not alleging wrongdoing but I would very much like more of an explanation. Perhaps this is temporary and it is just a blip and for the investors, I truly hope so. I would actually really like to see the owner/partner Marco Santarelli post here to clear any of this stuff up as I had considered investing with Norada at one point as well. I also listen to his podcast occasionally and he seems to understand the REI business quite well.

[Nancy Oh]

Jon,

You are so right.  I don't know what to do to get my $850,000 from Norada Capital.

[David Kanarek]

DANGER !!! ALERT !!! CAREFUL !!! STOP AND READ THIS FOR YOUR OWN SAKE !!

Marco Santorelli and Norada are looking for new investors when they just suspended interest payments until further notice without any resumption date. In 2023 before I invested any funds, each and every time that I spoke with their representatives, I asked as my FIRST question if Norada Capital Management had ever missed any interest or principal payments, and was always told the same thing by their representatives, that Norada had a perfect payment/reimbursement history.

The investors that have had these payments suspended have set-up a new Facebook page. Go and do a thorough investigation. The link is:

https://www.facebook.com/groups/1161232915077076

https://www.biggerpockets.com/forums/960/topics/1196567-norada-capital-management-suspending-payments?highlight_post=6803139&page=1#simplified-forums__discussion__replies-container

I have no reason to alert you of this danger other than honestly trying to help you avoid the trap that the rest of us fell into.

FOR YOUR OWN SAKE, DO NOT BELIEVE ANYTHING MARCO OR NORADA TELLS YOU UNLESS YOU SEE IT IN WRITING AND HAVE IT VERIFIED BY YOUR LAWYER.

[Jon P.]

I think it's safe to assume that all investors' capital is gone here. Sorry to be the bearer of bad news, but when you look at the facts of what money was invested in and how it was handled, it leaves little to hope for.

The only potential to get anything back is a potential SEC / FBI investigation to see if any fraud was at play where other assets of Norada is possibly garnished to pay back investors. I also think the first ones in line with an actual lawsuit will be the the first ones in line for judgements. That is how it works with judgements. Literally, first come first serve, assuming you are granted a judgement, of course. Sitting around waiting and hoping will get you no where.

Also, history seems to repeat itself. Not sure if anyone is aware of this, but Marco's partner and CFO, Ronald Fossum, was charged with fraud by the SEC fairly recently and barred from participating in any type of similar activity. Well, here we are again. I think the SEC would like to know about his participation with Norada and the current situation at hand. The most concerning piece here is that Norada is still actively raising money from their investors as if nothing is happening! At first I looked at this as possibly just a failed investment where millions of unaccredited investors lost money (still very bad for everyone involved), but after learning about the involvement of Ronald Fossum that has a convicted history of defrauding investors and the fact that Norada is still raising money from investors, my mind now goes immediately to possible Ponzi Scheme paying past investors current funds being raised. I can't help but think there is something more malicious here than just a bad investment by looking at the facts. Time will tell, but for anyone invested with Norada, you are best off filing a complaint with the SEC and seeking legal guidance sooner rather than later. Sorry to hear so many people got caught up in this mess. Seems like tens of millions of dollars were raised from unaccredited investors...

Here are some SEC links for a partner and CFO of Norada showing previous fraud history:

https://www.sec.gov/enforcement-litigation/litigation-releas...

https://www.sec.gov/files/litigation/complaints/2017/comp240...

[Jay Hinrichs]

Quote from @David Kanarek:

DANGER !!! ALERT !!! CAREFUL !!! STOP AND READ THIS FOR YOUR OWN SAKE !!

Marco Santorelli and Norada are looking for new investors when they just suspended interest payments until further notice without any resumption date. In 2023 before I invested any funds, each and every time that I spoke with their representatives, I asked as my FIRST question if Norada Capital Management had ever missed any interest or principal payments, and was always told the same thing by their representatives, that Norada had a perfect payment/reimbursement history.

The investors that have had these payments suspended have set-up a new Facebook page. Go and do a thorough investigation. The link is:

https://www.facebook.com/groups/1161232915077076

https://www.biggerpockets.com/forums/960/topics/1196567-norada-capital-management-suspending-payments?highlight_post=6803139&page=1#simplified-forums__discussion__replies-container

I have no reason to alert you of this danger other than honestly trying to help you avoid the trap that the rest of us fell into.

FOR YOUR OWN SAKE, DO NOT BELIEVE ANYTHING MARCO OR NORADA TELLS YOU UNLESS YOU SEE IT IN WRITING AND HAVE IT VERIFIED BY YOUR LAWYER.

 
all investments have a perfect pay record until they dont.. did you
really think when you asked the question they would say.. well actually
we missed 2 payments 3 years ago ??? lets be realistic here. This is
sales and marketing.. no one leads with Nope we have not paid as
agreed.. Who would ever invest.. now that they have not paid as agreed
of course they are going to find it difficult or impossible to raise new
money in the fund you invested in.. And probably have stopped raising
money in that particular fund and then started a new company and a new
money raise for something different but nothing to do with the one your
in..

[Ian M.]

@Marco Santarelli you had posted on this thread previously. Perhaps you could post again now to clear this up for all of the potential and current investors? It would certainly help to dispel all of the very real concerns we all have right now and potentially ease some minds for both current and future. Thanks in advance.