Quote from @V.G Jason:
This was so obvious with their note offerings at such yields. People just keep getting tricked by the high number, go for a realistic one and be happy.
Hope the best for the investors.
I don't know that their yields are that high, per se. They offer 12/15/16.7% on 3,4,5,6 or 7 year term promissory notes backed by no collateral, for investments of 50/100/200k levels, which at first sounds good but they appear to be making the loans possibly to a single non investment grade company "Retail Ecommerce Ventures was founded by Alex Mehr and Tai Lopez last year."
from
www.pennlive.com article , Published: Dec. 07, 2020, 9:52 p.m.
"The company that owns the intellectual property of Radio Shack, DressBarn, Linens ‘N Things, Modell’s Sporting Goods and Pier 1 Imports has purchased the intellectual property of Stein Mart Inc.
Retail Ecommerce Ventures’ subsidiary, Stein Mart Online Inc. submitted the winning bid of $6.02 million at the November 18 court auction. The winning bid was approved on November 23 by the U.S. Bankruptcy Court for the Middle District of Florida, Jacksonville Division. The subsidiary acquired the Stein Mart nameplate as well as its private label brands, domain names, social media assets, and customer data."
Most of their loan companies went bankrupt years ago, have zero physical assets, other than the trademarks which were bought and now are trying to have an online store presence, no physical real estate. As such this company, Retail Ecommerce Ventures, can't likely get an 8.5% prime rate loan from a bank or even the usual 17-22% loans from the BDCs that loan to this small/middle market space (read BDC 10qs financial reports for their prevailing loan rates), so they go to Norada, which gets cash from promissory notes, loans out at likely higher than the BDC rates then pays the difference 12-15% to note investors etc. who if smart is also leveraging up their loan book to REVentures to juice their profits even more. All the BDCs - business development companies do leverage as well, but they hold first lien positions over the assets of the businesses they loan to as well as equity positions for more safety. Why would Norada hold distributions? Non-performing loans, probably.
Marco explains their business in these BP Posts below: where he seems to contradict himself, saying In the post that the notes "ARE backed by hard assets and collateral." but on website says they are not. Also says in post that the notes are not higher risk just because yield is higher. That is prima facie Absurd, as the definition of risk is the interest rate that merits a certain Risk, ie directly proportional.
Marco Santarelli - Specialist
- Orange County, CA
Replied 3 years ago@Chris Yeung @Julian Buick @Steve Morris
Good morning gentleman.
Just to provide clarity in this post, there are three (3) separate companies:
1) Norada Real Estate Investments
2) Norada Real Estate Funding
3) Norada Capital Management
The Promissory Notes you're referring to belong to Norada Capital Management. These are not specifically real estate related. They are business notes backed by our portfolio of 10+ businesses which does include some real estate.
The note returns range based on investment but is double-digit. There are also bonus rates for larger investments. Interest payments are paid monthly, and Note lengths are currently 2- or 3-year terms.
Note that you must be an accredited investor as defined by the SEC.
Please let me know if you have any questions.
Continued success!
Marco Santarelli - Specialist
- Orange County, CA
Replied a year agoQuote 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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from their website:
WHAT FEES DO YOU CHARGE?
Norada Capital Management does not charge management or servicing fees of any kind. It earns a profit from the business loans it originates to approved businesses and real estate opportunities.
WHAT IS AN “UNSECURED” NOTE?
“Unsecured” means that, for making a loan to Norada Capital Management as set forth in the Promissory Note, the Investor does not receive any collateral in any of the company’s properties or other assets. The Investor simply receives the company’s written, legally enforceable promise to repay the Investor, and pay the Investor interest
Hopefully, there are not too many Norada loans in non-accrual state, but yields of 12-16.7% have to generate much more than that in order to account for the defaults and thus Risk level seems quite high.
