All Forum Posts by: Brandon Craig

Most recent update 

“
Dear Investors,

I just returned today from a being in x most of the week, conducting an on-site assessment of our properties and reviewing the status of tenants and ongoing operations. This visit has provided valuable insights into the current state of our investment, and we would like to share some key updates. Here’s a link of photos.

16-Unit Property: Next Steps

After careful consideration, we believe it is in our best interest to move forward with the sale of this 16 unit, x Apartments. Unfortunately, we will be selling this asset at a loss. The property has become increasingly costly to maintain, and a significant portion of our cash flow is being directed towards repairs. Additionally, we do not have the capital expenditure (CapEx) budget required to make the comprehensive repairs necessary to stabilize this asset fully.

Several factors have contributed to this situation:

1. Property Management Issues: We previously worked with two underperforming property managers who made several critical mistakes. They rented the units to bad tenants, misallocated funds (including two months’ worth of rent), and prioritized unnecessary repairs while neglecting key structural issues. This mismanagement greatly increased our maintenance costs and delayed efforts to improve the property's condition.

1. Evictions & Vacancy: Due to these missteps, we spent months working through the courts to evict problematic tenants. At present, our vacancy rate sits at 50%, but we are actively vetting a long list of prospective tenants. Our focus is on securing high-quality tenants to restore stability and improve cash flow.

Despite these challenges, we are confident that selling this asset is the best course of action to protect the overall portfolio.

Immediate Plan: Increasing Occupancy

To improve the property’s financial performance in the short term, our plan is to lease up the vacant units as soon as possible, starting with the three units that are rent-ready. Additionally, we will prioritize addressing the repairs needed in three other units that require the least amount of work. This approach will allow us to increase occupancy while minimizing additional expenditures and ensure a better overall condition for prospective tenants.

Strategic Plan: Sale of the x Apartments

Once the sale of the x Apartments is complete, we will retain ownership of 7 units within our portfolio. These remaining assets will be owned free and clear, without any mortgage debt, and will begin generating consistent cash flow, which will be directed towards regular investor distributions.

This transition represents a significant milestone in our strategy to streamline the portfolio, reduce risk, and ensure healthier returns for you all.

Looking Ahead

As always, we appreciate your trust and confidence in Poly Capital Group. We remain committed to taking the necessary steps to protect and grow your investments.

Please don’t hesitate to reach out with any questions or if you would like to discuss this matter in more detail.

Best,

Max

When asks for more details here’s what I got “We do not have a buyer yet, so we do not know numbers.
Unfortunately, You won’t get your initial investment back. We will give disbursements if and when we can sell the 16 plex and after we have absorbed the loss on it.
We cannot give specific dates. There is no crystal ball of when we can sell we have been trying to.
Unfortunately if we can’t sell we will loose all our investment. We will have to sell the 7 units to help pay off the debt. So we are working hard to get this apartment sold to avoid more damages.

if you live in Dallas, stay away from Poly Capital Group at all costs. 

Quote from @John Teachout:

Sorry to hear that. There's lots of us that are suffering a similar fate even with well vetted syndicators. The crazily rapid rise in interest rates pulled the rug out from under a lot of investments. The ones we invested in were much more conservative in their projections but will likely all wind up in the same dung pile.

Can they just hold until it stabilizes?

Quote from @Brian Burke:

@Brandon Craig totally understandable that you'd regret making this investment.  All of us who have invested in real estate for decades like Jay and I have regretted investments here and there over the years.

This investment didn't meet your expectations for a few reasons outside of the fact that it was a real estate investment.  Real estate investments can be great so hopefully you can apply what you've learned here so that if you decide to try it again you'll get a better outcome.

I think what may have went wrong here is you invested in real estate at the wrong time, and with the wrong operator (syndicator), and perhaps didn't have the expertise to sort either of those two factors out.  

What might help you for the next attempt is to read (BP's book written by yours truly--The Hands Off Investor), and network (join a community where investors discuss deals, trade advice and observations--coming soon will be Passive Pockets, an offshoot of BiggerPockets which recently acquired the popular passive investing group Left Field Investors).

Appreciate the advice. I am going to stick to what I’m good at and understand.  My career and auto investing in the s&p500. I dont care to ever be a land lord, GP or LP, RE seems to be either a lot of TTT ******** or you invest as an LP have no control over what’s going on. 

Quote from @Jay Hinrichs:

I suspect at the dollar amount you invested most attorneys would say its not worth it.

you could send in a sabor rattler letter for a few hundred bucks and see if that gets you anywhere.

Keep in mind these guys are not unique this has happened to many many syndication of MF

Just read the threads on BP.. And some of them the props have been sold and the investors completely wiped out.. At this stage its capital preservation being the goal. It would be nice though if they communicated and if they need to ride it out so be it thats just the market we are in for those types of assets. At least from what I read on BP etc.. I am not in the space I do have a few MF investments in syndication as well.. One limping along one performing OK I guess .  I mean both of them have not asked for capital calls or said they were forced to sell at a loss.. 

Thanks yeah I’m gonna wait another year or 2 and see what happens. I don’t think it’s fully iced yet we will see. Maybe if rates drop a bit and the market improves they can either try to refi again to pay us back or original investment or try selling later down the line. 

totally regret doing real estate at all - this is out of my expertise and I’m paying the price

Quote from @John Teachout:

So unless the property management is going to be done by the deal sponsors, they're not delineating what amount is going to which... The more details that come out about the structure of this syndication the hokier it sounds to me. You seem to be committed to moving forward with it so all I can suggest is to bring this thread back to life in a few years and let everyone know what happened.

I’m back lol. 

yall were right. 

shady mother****ers couldn’t refi, couldn’t sell. We were promised our investment back in January and cash flow and investors haven’t seen a dime yet.

sticking to the s&p500 - this was all a mistake. 

I invested 40k in a syndication 2.5 years ago. It was a 18 unit and a few triplexes. 

We were supposed to get our investment back at refi back in January (year 2)

And then cash flow every month after that until they sold it in 5-7 years

We haven’t received anything. They didnt refi, then tried to sell because they found repairs they apparently didn’t know about. They couldn’t find buyers. 

Now they’ve said they are holding for an Indefinite amount of time and since then they’ve stopped responding to me and email once or twice a year with corporate speak that says nothing useful. 

Am I **** out of luck here or can I get a lawyer involved? 

Quote from @Bonnie Griffin Kaake:

@Brandon Craig  Unfortunately, unless you are qualified as a Real Estate Professional you cannot use passive losses against your W2 income. And, it is very rare that the IRS will allow you RE Pro status if you have a W2 income. You can only use those passive losses that are generated with cost segregation against the income on that particular property. If you own other passive income you should discuss with your CPA/tax professional about aggregating all passive income properties so that you can offset the income on one with the losses on another. There is one other option that could help and that is if your spouse can qualify as a RE Professional. I hope that helps. If you need more information, let me know. 

Thank you. So I can use it against the cash flow at least from the properties

Hi All,

I am looking into my first syndication deal and if I was curious what tax benefits apply to someone who's about 3-4% on a 1.8mm deal that includes an 18 unit apartment and 6 air bnb's? 

I would love to be able to offset some of my W2 taxes.

Thank you,

Brandon

Quote from @Chris Seveney:

@Brandon Craig

Post the PPM but It seems like you already made your mind.

Chris, I do not know why you continue to comment and state that I’ve made up my mind repeatedly.

Everything being said I am absorbing, factoring into my decision and asking my sponsor questions. If I made up mind I wouldn’t be here looking for advice. 

let’s cut out the assumptions. 

Quote from @Chris Seveney:

@Brandon Craig

Missouri and essentially 100% returns since they are charging 10% fees and 86% return split so investors get 43%

Clearly this is not an experienced investor sponsoring the deal as an experienced investor would show a 15-20% return and if returns were higher lower expectations which lower risk and if they got more they look like heroes. Starting at 43% is close to criminal / fraudulent and not something any experienced investor would ever show.

Is 43% that insane if they 1) got the 16 homes for 400k when It was 600k ask from an senior that didn’t want to deal with them anymore and 2) and the apt appraised 200k over 3) 6 air bnbs bring higher return coupled with the 18plex