All Forum Posts by: Chuck Van Court

To clarify:  I am not suggesting that Chase is anything like Scott. I have found him to be a decent guy.  I have also met several other people who at one time or another had an association with Scott that I possibly would invest in after proper deal analysis and further personal vetting. There are no easy short cuts to proper DD for each new deal.

I am sincerely sorry to hear that people have suffered the loss of time and money at the hands of Scott Carson. As a complete newbie in the real estate debt space I also took a free online note class with Scott in 2/2016. The class provided lots of valuable information and Scott was certainly energetic and knowledgeable, but he consistently came across as insincere and overbearing to me. Beyond that, I was totally turned off by Scott overtly teaching people with no experience how to get JV partners to fund their note deals. In particular, Scott Carson and Chase Thomson (assisting with Scott) suggested during the class that newbies represent glossies of other people's specific note results as "here are examples of the type of deals I do." I challenged them during the class that they were promoting very deceptive practices with potentially material financial consequences and they quickly shot me down saying it was just "salesmanship" and you have to get started somewhere. No, they never suggested that a person specifically say that these examples were deals they have done themselves, but … I wish people luck in making Scott accountable where appropriate and hope he has not created an army of mini-Scott's in the note business. We all must verify, manage and then trust until shown otherwise, not the other way around. People who have a current or prior relationship with Scott should get nothing more or nothing less.

@Clayton Mobley  Thank you for your reply.  I have been emailing with Maureen and her admin, but I have been unsuccessful in getting responses to a few questions for several weeks now. 

Regarding exit options: does your company offer any services and have any historical data regarding reselling any of your investor's properties?   

Hi Blake:  Congratulations on your great success!   Spartan clearly has an effective delivery.

The only area that still gives me pause and Spartan has been non-responsive towards answering my questions relates to appraised value and realistic exit options.  Did comps in your appraisal include purchases by home owners rather than just investors?  Would you be willing to share the appraisal? What do you foresee as your realistic exit options in say the next 5 years to 10 years?  

Thanks!

It is very unlikely that built-in equity at purchase date would exceed the 20% down payment.   

As already mentioned, my concern is that flippers are setting market prices and the appraisals are driven by investor purchases rather than by homeowners.  I believe this translates to limited exits and inflated pricing at purchase.   I would think that sans a big move in the area's housing market, an investor would be waiting for years before they would have equity to take out of the property.   I would love to hear what Blake found on his deal. 

Hey Blake: Thanks again for sharing your experiences.  Would you be willing to share your appraisal on the property?  I too have been favorably impressed with Spartan and my only reservations come down to market values and realistic exit options should I need to sell the property.  Thanks!  Chuck

Hi Lucas:  Thanks for your reply and insights.  What do you and other Spartan Investors think about the investor purchase price?  I am concerned the pricing may be largely based on the pro-forma returns and using comps that were also based on purchases by turnkey investors.  As such, is the only realistic exit to sell to another investor?  If so, any thoughts on timing and pricing for re-sales? Do you know if Spartan or other good turnkey operators that get the investor in the process earlier to afford a lower price and more built-in equity?  Also, are you able to get insurance that pays out replacement value? Thanks again!

Greeting Lucas: Did you rent the property?  What has Spartan said to you about what is causing the big delays to rent? Any other thoughts on Spartan? Thanks!

Hi Deon: I understand what you are saying and it makes sense. However, their computed ROI used for existing investors and prospects still seems overstated to what an investor will realistically receive. Do the other funds do the same thing when providing their actual investor ROI achieved?

Hey Dion:

Thanks for your response! How goes it?

Your example is a little off to what Broadmark is doing. I have provided a simple example below:

Again, I am generally happy with the returns I am getting from BroadMark, but I think their computed ROI is overstated, especially so if more loans go into default.

It should also be stated that the LTV of BroadMark's loans are very low (averaging around 60%) and ultimately they should ultimately be able to work out of all bad loans over time.

EXAMPLE:

1. On 1/1:

    a. Bob invests $100 into Broadmark fund, which has $1000 invested from all investors.

    b. Broadmark has $900 out in loans and no defaults and RLD.

2. On 1/31:

   a. Broadmark collects $10 in interest and fees applicable to investors

   b. Bob gets $1 distributed to him ($10*($100 orig. investment/$1000 total inv.))

i. Bob's ROI for Jan computed by Broadmark as 1% = $1/$100

3. On 2/28:

  a. No new investors added in February.

  b. A loan in the amount of $100 goes into default in February

      * RLD is computed as $10 = 10% (Broadmark’s % for RLD) * $100

  c. Broadmark collects $9 in interest and fees in Feb. applicable to investors.

  d. Implications to Bob:

     * On 2/1, Bob has $101 invested in the fund with his $1 Jan. distribution and $100 original investment.

    * Bob gets $.90 distributed to him:

           1. $9 (total distribution)

           2. * $101 (Bob’s investment at BOM)

           3. / $1010 (Total investment for all investors at BOM)

e. Bob's ROI for February computed by Broadmark as .89% ($.9/$101)

5. If Bob elects to take money out on 3/1, Bob gets returned:

         a. $100 (original investment)

         b. + $1.9 (distributions)

         c. - $1 (Bob’s share of RLD)

         $100.9 (Total returned)

6.Bob's computed annualized ROI: .15%

     a.  $.9 (amount earned)

     b.  / $100 (amount invested)

     c. * 2/12 (months invested)

7.Broadmark's computed annualized ROI for Bob equals 1.89% (1% + .89%)

    a. If Bob rides it out and only closes out of the fund if the RLD applicable to him is zero, then BroadMark’s return would be reflective of what Bob should actually earn.

Broadmark is well managed and has experienced nothing close to this example's extreme assumption that 10% of all loans go into default in month, but most investors will certainly have some RLD applicable to their investment at the point they withdraw their funds and BroadMark's ROI computation does not seem to provide a realistic ROI for what most investors will actually receive.

What say you?

Thanks for all opinions shared!

Chuck