All Forum Posts by: Cheryl A.

Regarding the views on high returns, what advice do you have for small scale investors? If it appears to good to be true it probably is? 

Why do large investment companies solicit small $50k -100k investments for multi million $ investments from people they find on Facebook?

Quote from @Chris Seveney:

@Cheryl Abram

Out of curiosity what type of return were they promoting?

Curious as another poster is intrigued by the 24% but it sounds like your return is negative 100%.

Common syndicator game of throwing out huge returns when other funds are going under because they want you to only look at that shiny number and not what their past performance has been

@Chris Seveney

25.7% Annualized Return / 21.7% IRR.

This was my first passive investment and yes I was under educated, naive and attracted by the expressed returns. I did what I felt was good amount of due diligence, but in hindsight I missed some deeper layers of analysis. 

My biggest frustration isn't with the deal failure itself, it's more with the operating performance of the GP and honestly I'm not sure how an LP can really determine this. Ask for references which are hand picked by the GP? I don't think so. Social media seems the best resource for this nowadays.

Out of curiosity, what recourse do LPs have when GPs fail to operate according to the operating agreement? Fail to produce K-1s in time for LP tax returns to completed on time, refuse to communicate with LPs, when LPs start to express frustration.

Cheryl

Quote from @Anastasia Foster:

Hi I am currently looking into their fix and flip fund- their 24% pref is hard to pass up but also doing my due diligence since I have not worked with them before

@Anastasia Foster

Perhaps a data point for your due diligence. My experience with Djuric Family Office aka now the Blake Capital Group, has not been great. Some of my frustrations include:

• - Zero transparency on where my funds were being invested. Everything presented indicated I was investing directly in the deal, however it now seems I was investing in DFO and DFO was investing in the deal. 
• - Investor reports were either not received unless I asked for them, or they were received 2-3 months late.
• - K-1s were not made available until mid Sept every year.
• - Communication is poor, I have to repeatedly chase for updates. Several of my questions were intentionally avoided and unanswered.
• - Documents were promised week after week, but never delivered.
• - The investment portal is not properly managed, kept up to date or actively used to track financial progress of LP investments. Took many months of chasing to have record of my funding recorded in the portal.
• - One deal failed and the property sold in Dec, however I was not informed until Apr the following year by the lead operator. In Sept I'm still waiting for an official announcement and legal documents to be provided.

My second investment with them is also on the verge of failing with the property heading for foreclosure.

Best of luck, Cheryl

Has anyone invested with the Ian Djuric at the Blake Capital Group (https://blakecapitalgroup.com/) formerly Djuric Family Office (http://djuricfamilyoffice.com/)? If so, what experience have you had?

Thanks!

Has anyone invested with the Ian Djuric at the Blake Capital Group (https://blakecapitalgroup.com/) formerly Djuric Family Office (http://djuricfamilyoffice.com/)? If so, what experience have you had?

Thanks!

Quote from @Evan Polaski:

@Chris Seveney, I like how this has become a sleuthing thread now...

https://www.linkedin.com/in/shanecarternh/

2004-2021 Shane was CEO of Community Investment Properties (my guess that is CIP).  

Clearly none of us know for sure, but my hunch is this effective equates to a syndicated seller financed deal.

 Thank you everyone for the feedback & advice you have shared!

This is crazy stuff, just looking through emails:

- the loans went into default in December and the asset was sold on December 29th, 2023. All LP capital was lost and all GP contributions were also lost. 

- The property was sold via a membership interest purchase agreement and resyndicated on Dec 29th 2023. All original investors lost the entirety of their investment. GPs also lost the entirety of funds that we invested. 

---------------------------

Pivoting back to the original intent of the forum post by @Forest Wu:

1/ List the GP / syndication that you've had a terrible experience with

Co-sponsors

• Djuric Family Office (known now as Blake Capital Group)
• Legacy Wealth Holdings
• Community Investment Properties

2/ At a high level (and as much as you're comfortable sharing), provide a reason for why the GP / Syndication should be avoided from your experience (or an acquaintance's experience)

Djuric Family Office / Blake Capital Group:

• Zero transparency on where my funds were being invested. Everything presented indicated I was investing directly in the deal, however now seems I was investing in DFO and DFO invested in the deal.
• Investor reports were either not received unless I asked for them, or they were received 2-3 months late.
• K-1s were not made available until mid Sept every year.
• Communication is poor, I have to repeatedly chase for updates. Several of my questions were intentionally avoided and unanswered.
• Documents were promised week after week, but never delivered.
• The investment portal is not properly managed, kept up to date or actively used to track financial progress of LP investments. Took many months of chasing to have record of my funding recorded in the portal.
• The deal failed and property surrendered in Dec, was not informed until Apr the following year by the operator, in Aug still waiting for official announcement and the MIPA to be provided.

Co-sponsors Legacy Wealth Holdings(operator), Community Investment Properties – refused to help LPs that were not brought in by them.

3/ Any lesson learned to help future investors

My key takeaways from this experience are:

• In addition to doing due diligence on the investment, underwriting, & sponsors.
• Be very cautious of these joint co-sponsor deals, ask for and understand the partnership agreement before deciding to invest.
• Understand that co-sponsors oversee the interest of the LPs they bring in only.
• Avoid fund of fund / feeder fund investments, instead invest directly in the investing entity.
• If you value timely communications & receipt of investor updates, k-1s, etc, invest only with the deal operator.
• Ask for a walkthrough of the investment portal using live data in an actual active investment account to ensure its managed according to your needs. Investor reports added promptly, financials accurately tracked, distributions recorded, investment metrics calculated and up to date, etc.

Best luck to all!

Cheryl

Quote from @Bobby Larsen:

 Hi Cheryl - I would highly recommend that you speak with an securities attorney. It is well worth the small investment it would take for a consultation to understand what your rights and path forward are. To me, it sounds like you invested in a "fund of funds" which isn't a new structure but rather it's been newly weaponized amass large amounts of retail investments. Most of the time, these groups that are referring to themselves as the general partner, are not actually the general partner in the direct investment. They've simply created a legal entity in which they are the general partner to raise capital and then place that capital in the investments of other operators.

What the operator is likely saying is that you did not invest in the direct real estate investment offering, you invested in a llc/partnership that invested in the operator's direct real estate investment llc/partnership to acquire the property. This is purely an assumption though and one that can be confirmed if reviewing the operating/partnership agreements. Three questions: 1) Is the operating agreement you signed for the direct entity that owns the property or an entity which invested in another entity which owns the property? This can also be confusing because there is often what's called a "pass through" or "disregarded" entity in the structure. 2) Did the operator sign any of your subscription paperwork? 3) Did you wire funds directly into the operator's bank account or the co-GP/fund of funds bank account?

Either way, I would highly recommend seeking counsel if you aren't receiving clear communication. What might end of having to happen is that you seek a judgement/control of the fund of funds that you invested in which then has limited partner interest in the direct offering. 

Hi Bobby, I also believe this is what is being asserted. The assertion is I invested with DFO, not directly with Waterford Grove LLC.

The investor OM is Waterford, Houston with three co-sponsors:

• Community Investment Properties
• Legacy Wealth Holding (operator)
• Djuric Family Office (now Blake Capital)

Three questions:

1) Is the operating agreement you signed for the direct entity that owns the property or an entity which invested in another entity which owns the property? This can also be confusing because there is often what's called a "pass through" or "disregarded" entity in the structure.

The operating agreement I received is:

OPERATING AGREEMENT OF WATERFORD GROVE HOUSTON LLC

Signed by all co-sponsors and Class B Members

Note: there are no LP signatures on the operating agreement.

2) Did the operator sign any of your subscription paperwork?

Note the xxx’s are my masking sensitive data.

The PPM I signed is:

PRIVATE PLACEMENT MEMORANDUM WATERFORD GROVE HOUSTON LLC

SUBSCRIPTION AGREEMENT

TO: WATERFORD GROVE HOUSTON LLC

Attn: xxx, Attorney

Address: xxx

Telephone: xxx

Email: xxx to lawyer at Legacy Wealth Holdings

Signed by the contact at DFO that brought me into the deal. His title is listed as manager.

3) Did you wire funds directly into the operator's bank account or the co-GP/fund of funds bank account? my funds were wired to Waterford Grove Houston, LLC

This was not explained pre-investment and there is absolutely nothing legally pointing to my investment with DFO, except for the K-1s I've received come from DFO Waterford LLC.

Where’s a good resource to find counsel?

Thanks, Cheryl

Quote from @Chris Seveney:

@Cheryl Abram

It’s typically called a co-investment which they can be very complex. (For those reading I don’t recommend these types of investments) the only way to get more info would be to get the partnership agreement which they should provide to you.

Who is the sponsor ?

Hi Chris, I would also not recommend these types of investments. My experience has been complete madness. The co-investment structure was not well explained to LPs, significant delays receiving investor reports / tax docs if you're not directly invested in the deal with the operator, when the deal fails co-sponsors that you are not invested with refuse to help citing advance from lawyers. 

Sponsors are: Community Investment Properties, Legacy Wealth Holdings, Djuric Family Office (aka Blake Capital). 

How is it the fully executed operating agreement clearly states investment directly in the deal, however sponsors say no the investment is with one co-sponsor only, but there's no legal contract to support this?

Thanks, Cheryl

Quote from @Henry Clark:

OP My point:

1.  Show us your checklist.

2.  Walk us thru your deal analysis and deals.

3.  Go make a post and add value.  Build a better due diligence checklist.

4.  If you haven't done a deal, then make a post saying you're in Analysis Paralysis, want to do a Syndication investment, what should you do.  Asking people for the Best markets, the Best GP, the best PM's, etc; adds no value.  If you were in my market, I would not give you the name of my best team members.  You have to pay for your learning.

5. If you are just hesitant on REI, then switch industries. Look up medical for Shock Wave therapy and/or Pre Nuvo body scan.

I just don't like Enabler or Victim approaches.  If you follow the thought process to the next steps:

1. Make a list of Good/Bad GP's. Thus far no one has shown a Due Diligence list or attempted. So why would you want to take LP advice on what a Good or Bad GP is? This Enables Lazy investing. More people "like" this GP, thus should invest there. You don't even know if it fits your REI type or Risk/Reward analysis.

2. Make a list of LP deal analysis and share. Who says the other LP's can even do a deal analysis and also understand Risk/Reward analysis? Or if it fits your investment strategy? And then why share your deal analysis? Ask the more prominent posters on this thread no matter what REI strategy. Please post each deal analysis you do, and tell us whether it is good or bad; before they even invest in it.

The last Bad GP post on BP, the investments were Broadway Plays, Defunct brand Names, Mastermind programs, and Crypto arbitrage.  All of those people investing in that deserve to lose their money.  People should lose their money.  It's part of the learning process and also an efficient market.

The majority of the Syndication issues right now are due to Greed on both the GP and LP's sides.  The numbers look better using Variable Rate interest.  They should have locked down their financing for the period of the investment or had the Balloon terms come close to the investment life cycle.  Syndication pro formas look better with a low interest rate, LP's want a better return, no one did a Risk/Reward analysis.  

If you were in a new construction syndication and got caught with a 300% increase in Lumber costs due to Trump applying Tariffs to Canada for anti dumping, and then Covid shut down both the logging and Lumber Mill industries in Canada I can understand getting nailed.  No one would have factored in a Black Swan event.  So, a really good GP could have some very bad results.

Hi Henry, I think you're missing my point. My frustrations aren't specifically with the deal mechanics, even though I'm very disappointed in how they turned out.

My frustrations come from the lack of GP "soft skills" / broken promises that were made around full transparency (good & bad), open and timely communications, prompt delivery of investor updates & k-1s, communication in laymen terms, actively updated & accurate portal, etc. 

These are points on my due diligence checklist, but they are very hard to vet and at the end of the day LPs put a degree of blind faith in GPs to keep their word. Much like we all do in other areas of life (e.g. doctors).  

I'm a technology professional, not a real estate professional & not a banker. Having a forum to share LP experiences like this is a valuable tool to have to help me complete my due diligence checklist.

Changing topics, can anyone help me understand how deals are structured behind the scenes when multiple GPs partner to run the investment, bringing in their own set of LPs? For example with one of my investments I'm being told by the operator that I'm not directly invested in the deal, but instead invested with the GP (DFO) that brought me in, however the executed PPM, OM and the bank I wired funds to all say otherwise. 

Despite requesting the GPs explain this to me in more detail I haven't been able to get them to explain. Leads me to believe there's something sketchy going on here.

Best wishes to all, 

Cheryl   

Quote from @Forest Wu:

Hi! One of my last posts was asking about syndications/PE opportunities. Unfortunately, I've come across quite a few people who are really upset with how their syndication experience has been. Quite a few people have lost a lot of money. I think it'll be very helpful to increase transparency on those operators who have betrayed their investors trust or simply are poor performers. So let's do the following:

1/ List the GP / syndication that you've had a terrible experience with

2/ At a high level (and as much as you're comfortable sharing), provide a reason for why the GP / Syndication should be avoided from your experience (or an acquaintance's experience)

3/ Any lesson learned to help future investors

Let's help each other avoid future mistakes and bring hold GPs/operators accountable. 

I appreciate the context, transparency & honesty shared here.

For the most part, I’m an inexperienced LP investor.

My first two investments with the Djuric Family Office / now Blake Capital Group, started in 2021 and my experience has been awful.

One deal collapsed in Dec 2023, which I found out 4 months after the property was sold back to the bank, by the operator. To date Blake Capital investors have not been formally notified and despite repeated requests I’m not able to get anything of legal value to support the collapse and narrative around it. All I’ve received is bad property managers and rising debt costs are to blame, GPs have lost a lot of money also, this is the first deal failure for the GPs …

The second deal has had two capital calls and is scheduled for foreclosure in August, unless additional funds are raised from the last capital call. My request for the root cause of the failure has yet to be answered.

My frustration comes from the lack of transparency into how the deal was structured with GPs/Operators. Seems like unless you invest directly with the operator, you’re going to be treated as a secondhand investor with lagging communications, investor reporting, tax docs, etc.

Extremely poor communication, most often I’ve had to repeatedly ask for a response.

Inconsistent investor reporting, sometimes monthly, sometimes quarterly, most of which has been received 2-4 months past the reporting period.

Investor portal that appears to be used for show only. I had to push for my investment to be registered and funds to be documented. The accounting has never been added and 8 months later and the portal still shows I’m actively invested in the failed deal.

K-1s received late Q3.

I was naïve and inexperienced, and I accept some degree of blame for this, however I feel I have been very misled and there appears to be no accountability for this.

Are LPs able to file a Suspected Securities Fraud or Wrongdoing report with the SEC? Any other recourse LPs can take?

Appreciate any advice on this.

Thanks, Cheryl