Quote from @Tony Kim:
Quote from @Giles D.:
Good morning everyone,
I invested in a syndication deal back in late 2021 through Simple Passive Cashflow and Truepoint Capital, with Lane Kawaoka and Kyle Jones respectively as GP's. The deal has produced 1 single distribution in that time and now they have both stopped updating the LP's on the deal and have not had an updates this year. They have now stopped responding and corresponding to emails and the only phone numbers they provide go to a medical facility in Florida and a full VM box that never gets responded to.
Am I just f'd out of my money here with no recourse or do I have any leg to stand on to try and sue them for poor due diligence and not fulfilling the promises made? I've received 2 K1's so if this is fraud then i'd imagine they've committed a federal offence by issuing false documents to the federal authorities. Yes, I am getting desperate but I'm throwing myself to this crowd to see if any one else has gone through something similar or can give me some advice or even to laugh at me and say what an idiot I was, which I know already so save yourself the time!
Regards
Giles Dalrymple
Sorry to hear about this!
I initially learned a lot about syndications through Lane's website, so I credit him for opening my eyes to a different type of investment. But as someone who works in finance (specifically private credit), I quickly learned about how things are structured in a syndication deal as well as the risks involved. I also quickly realized that the deals Lane was involved in were not a good fit for me.
One of the most important criteria when selecting a sponsor is to ask how many real estate down cycles has the syndicator been involved in? This question eliminates probably 99% of deals I look at. I don't fault Lane for becoming a syndicator...in fact I admire him for taking the initiative and "going for gold" so to speak. If in ten years he had developed a successful track record with multiple deal exits, I would consider investing with him. But I would never invest with a sponsor who I feel I have surpassed in knowledge.
Me as well. I was and still proud that Lane can upgrade his identity from BP single-family landlord among us into syndication. But the more he advances, the more he seems to do too much business, which is too much for his level and should only be executed by an institution with a higher risk/reward attitude.
An investment syndication that a single person is leading, is no longer an interest to me. True, the promised return is higher but in reality, a very strong multi-billion company can do/offer the same with much less return, but with less risk as well. Lane is just growing too big and too fast. Good for him but may not be good for me or LP investors.
If he avoids chasing deals every few months he should be okay. He should follow Burke where he stopped acquisition after 2020.
Outside of his acquisition, there are also lot of things that's wrong in Biggerpocket in my opinion:
1. There's good and bad GP syndicator
2. Timing in the market is not important.
For number (1), debt agencies that do the due diligence process for GP syndication, only give ratings average and below average, there's only a myth that one GP would perform better than the other GP. The debt agency, however, the agency put microscopic lens to the business plan and NOI. Most of GP syndicator have received bad reviews from debt agencies, by saying their business plan doesn't make sense, and that the NOI target is off by 20-30% sometimes.
For (2), understanding the CRE/RE cycle is important; from a historical basis, there are always two mini-bullish cycles after one downturn, and one mini cycle is about 4-5 years. in 2020 we are reaching the third cycle where usually we will see more volatility and indeed it does happen. Just avoiding investing in the FOMO cycle could prevent people from losing money.
Any volatility changes in rate and lack of liquidity would wipe out the CRE equity as well, that happened globally in the world too.
