All Forum Posts by: Paul Azad

Quote from @Dewayne C.:

Quote from @Paul Azad:

Norada Capital 23% promissory notes ending up as just an honest business failure was about as likely as a chronically depressed Leming surviving the annual ocean crossing.

Not too optimistic about the current DOJ aggressively prosecuting so he may only get probation and some community service where he has to help the elderly with their retirement finances. :) what could go wrong.

please people, If any investment offers high returns aka >3x the 10yr yield, and says low risk, then it's always a scam and run away as fast as a Leming

 It wasn't 23%. 15%. And there are several private entities that do offer this percentage of return. Some higher. But scammers are getting so good at it, it's hard to tell which is honest and which is a criminal. In some of the review sites, he is still getting positive reviews! And he was doing business right up till he was served! I now just go to my financial advisor. At least it will be on him if he gets scammed. 

 sorry, been a while since I thought about this old scam. I posted the below more than a year ago about this.

"I doubt that the vast majority of the investors in Norada Capital Management's unsecured promissory notes were intending to invest in an illegal Ponzi scheme. But that is precisely what the company appears to be, or to be more precise, a feeder fund to the larger Ponzi scheme, which was Retail E commerce Ventures run by Tai Lopez and Alex Mehr, who, if you go to Norada Capital Management's website this very moment under team, is still listed as the number two advisor underneath Marco Santarelli. Mr. Alex Mehr, the owner and cofounder of REV which bilked investors out of $270,000,000 just a year and a half ago and discontinued distributions in November of 2022 and is now under SEC investigation and multiple lawsuits, and was paying 25% promissory notes with a business plan of online retail from a dozen bankrupt old brands despite having little to nothing listed for sale on the websites (the same dozen listed in same order on Norada site) to Norada Capital Management which then paid out 12 to 16% promissory notes to the unsuspecting investors here on BP above and in other threads. REV made 150mil in 2021, 60 mil in 2022, but lost 60mil in 2022 in expenses and had 200mil in debt before folding in 11/22. (it was never a legit business nor any intention of being one, think AMWAY/Herbalife) Norada still fundraising this minute on website and Marco pitching his promissory notes just 4 weeks ago on a webinar saying only 75% E-commerce, but the growth is in Off Broadway musicals....WTF!!!. All Ponzis keep running until they run out of investor inflows, never before.

It is not whining for BP members to complain about a complete loss of capital and a former BP Darling Marco the turn-key real estate expert from going RadioShack-silent for a month. It is the least they can do to warn other potential investors who Marco is literally still apparently preying upon this very moment.

Or maybe I'm way off base and the modern day Einsteins of Marco/Alex, and Tai were going to defeat low-cost on-line shops like Amazon/Wal-Mart and TEMU. Remember, those dozen bankrupt companies had already failed online once, hence they went bankrupt already. Their intentions seem clear ad Incipio."

be careful with "Financial Advisors", as they have no real fiduciary responsibility, only one to put you into "risk appropriate" investments which is a Loophole big enough to steer an aircraft carrier through.

Norada Capital 23% promissory notes ending up as just an honest business failure was about as likely as a chronically depressed Leming surviving the annual ocean crossing.

Not too optimistic about the current DOJ aggressively prosecuting so he may only get probation and some community service where he has to help the elderly with their retirement finances. :) what could go wrong.

please people, If any investment offers high returns aka >3x the 10yr yield, and says low risk, then it's always a scam and run away as fast as a Leming

perhaps a Joint Venture would be better for a novice small investment :from Google:

How Joint Ventures Are Structured

• Entity Joint Venture:Partners form a new legal entity, like a Limited Liability Company (LLC) or limited partnership, which owns the property and manages the venture.
• Contractual Joint Venture:No new legal entity is formed; instead, the parties' rights and obligations are defined by a comprehensive contract.
• Equity/Non-Equity Joint Venture:
  • Equity JV: All parties contribute capital to the venture.
  • Non-Equity JV: One party provides services, expertise, or other non-monetary resources instead of capital.

Key Elements of a JV Agreement

• Capital Contributions: Specifies the amount and timing of capital each member will contribute.
• Management and Control: Outlines the roles and responsibilities for managing the project.
• Decision-Making: Details how decisions will be made and which partners have authority.
• Profit and Loss Sharing: Defines how profits and losses will be distributed among the partners.
• Exit Mechanism: Specifies the terms and conditions under which the venture will end, including procedures for dissolution.

You do have to start somewhere, but learn as much as you can/communicate with your partners, and fully share with them that this is Ultra high risk. The mom and pop you're buying from also started from nowhere too.

Also a few more single family homes in your portfolio would garner more faith from your investors and improve your odds of success with more experience.  good luck :)

Quote from @DARIUS SMALLWOOD:

I am just starting out and I've been looking at deals all night, and to be honest, like every deal I come across looks good to me, which is coming from somebody who's never done it before, so I'm looking for more information on what to look for in multi family homes that separate the good deals from the astronomical ones, 

Darius, you posted this on the Syndications Forum, so assuming you were up all night looking at Multi-Family limited partnership capital positions. They will try to WOW! you with projections of >20% IRRs and their fabulous records in the 2010s until mid 2022, they won't list exits in 2023/2024/2025, because they didn't exit. They were cremated or entombed. Step 1 for me is MACRO, Is now a good time to buy? what is the supply demand for MF in the market you are looking at, (rents in Austin fell 9% last 12 months) What is the MACRO debt market doing, higher cost of funding? The FED controls cost of money and cap rates are 99% = 10yr yields, their graphs track perfectly minus asset specific spread. Step2 is MICRO, neighborhood/3mile avg household income/property condition/tax abatements-(100 more details), then get into debt structure - fixed 7-10yr fannie/freddie low interest, preferably with interest only period etc (100 more details).
you want to only focus on RISKS, don't look at IRRs/MOICs etc. I can get the IRR to change from 10% to 20% just by tweaking the exit cap rate estimates by 75-100 bips. If you take care of the risk side, the profits will take care of themselves.
you're in control and have the power to walk away. there are 10,000 more deals and they always get better, because you get smarter/pickier. good luck :)

Quote from @Cheryl A.:

Thanks to everyone for adding to this post. Sharing positive/negative experience is really the only way to help strengthen this investment community! Please share your reviews to help other investors navigate this complex space.

Does anyone have experience going down the American Arbitration Association path? One of the operating agreements state this is the path for disputes, so I'd like to understand what to anticipate from the process. Is accompanying counsel beneficial, how long was the process, was the end results reasonable, etc.  

 Cheryl, if they put you into a 506C then they violated SEC law, 506B then that's ok as you are non-accredited. You should also contact the SEC to ask them to start an investigation.      please consider publicly traded REITs, returns beat the sp500 by 3-4% x 50/40/30 years and transparent/liquid/with very low, <1% default-bankruptcy rates.  - good luck :)

I'm worried the 10yr yield will be >10% within 4-5 years, due to rapidly growing Fiscal Dominance of the federal government, meaning the federal spending is accelerating faster than GDP. Pre-GFC, private US banks created the lion's share of new US dollars - M2, but since then the majority each year is made by Treasury Dept/FOMC, which is insensitive to interest rates, unlike a private bank and the private clients who debate whether to take out a loan at X %. Sustained massive issuance combined with foreigners seeming less and less likely to buy our Treasuries (sell America trade) will put upward pressure on Yields, irrespective of what the FED does to the overnight Funds Rate.

Now we may not feel this or see long bond yields rise for a couple of years due to decreasing GDP, both in US and globally, due to Tariff impacts. Historically there has been a 3:1 ratio of decreased capital flows to change in effective tariff rates for the US. So, if our effective tariff rate on 4/1/25 was 2.4% and today is 18.3% per Yale Budget Lab and other reputable non-governmental sources, then we may see a severe 45% drop in trade/capital flows, assuming foreign countries respond with reciprocal tariffs and boycotts like we are seeing already from Canada and Europe. 

Hope this doesn't happen, but cities like Las Vegas might be a "canary in the coal mine" as foreign and domestic tourism have sharply declined. Also, the BLS jobs revisions last week showed huge drops, and those numbers were consistent with ADP numbers and other academic numbers. The "new" head of BLS said yesterday that the Bureau will likely not release the unemployment numbers on the first Friday of August, "so they can get the numbers right this time." This would be the first time in my memory where the BLS just stopped releasing data, could it be that the 135k revisions from each of the last 2 months may have to be applied to July as well, then creating the first negative number since Covid? This last week core CPI and PPI are showing expected rapid inflation from producers first and then consumers as expected, with core PPI from 2.6% to 3.7%, and core CPI from 2.9% to 3.1%. This inflation may raise yields temporarily or Bond market may see through it and weight the GDP slowdown more. 

so short term yields may fall due to slow growth but longer term will likely rise a lot.

"May you live in interesting times" is the old Chinese proverb, I'd take boring flat yield times. :)

1970 until 1980, US dollar lost 75% of its purchasing power - the typical every 75 to 80 yr government playbook, an inflationary deleveraging, unfortunately looks like it's time again. From '46 to '81 10yr yield went from 2% to 15%, from 1900 - 1920, 3% to 6%. We have already moved from 0.31% to 4.3% from 3/2020, but I fear we have much farther to go. 

How the Ashcroft Capital Lawsuit Is Shaping the Future of Real Estate Syndication - Heralds Post

poorly written piffle, probable AI bot article about Ashford, no reference to the risk disclosures in the Offering Memorandum/Partnership Agreement, which is the whole legal case. ie, did they disclose all reasonably foreseeable risks of the investments. real estate clickbait.

Ashford acted like hundreds of other Multi-family syndicators, greedy to keep dancing while the music played rather than grab a seat in 2020 or 2021 before the music stopped in 2022, after the most easily foreseen and predicted rate rise in US history, following inflation by Trump mailing out 3.8 Trillion directly to the people. Investors/LPs due to their usual combo of profound ignorance and even more profound greed kept dancing well after the music stopped and a deafening silence could be heard by anyone qualified to hear. 

The problem : >95% of Americans are not qualified/educated enough to buy real estate, nor any private company, nor any public company. The current law that sets "accredited investor" was written by Congress - Regulation D in 1982,
"Net worth must exceed $1 million (excluding the value of a primary residence), or individual annual income must exceed $200,000 (or $300,000 for married couples) in each of the two previous years", and it hasn't been adjusted for inflation since. Tens of millions of people meet these incredibly low standards, and an inflation adjustment alone to 2025 would take these up to about 3.5 million net worth and 600K income alone, which still wouldn't add what's needed which is a rigorous experience component or extensive written exam. Heck, I had to fill out a 2 page form and pass an eye exam last week at the DPS to renew my driver's license. 

sorry just venting now.  :)

The average American investor in public companies earns about 1/3rd the return of the sp500, (JPMorgan wealth management study) which is just blindly buying the 500 biggest US companies. If they can't be trusted to buy stocks how can we trust almost anyone to comprehend CRE/macroeconomics/200 page offering memoranda etc. maybe we shouldn't.

Happy Mother's Day🤠

Trump announced last night he is canceling/caving on the tariffs to China on 20 major products. Kind of everything that's expensive that we need, like smartphones to computers, to servers, to microchips, etc. This should cause the stock market ie MAG-7 to rise over the next week, SP500/QQQ Futures are already up two to 3 percent. And it should stop the margin calls, which were triggering the bond sales on the long bonds, causing the 10 year and 30 year to rise this past week as well as any repatriation of funds to Europe to buy German Bunds if European Money thinks Trump is less erratic.

So our long bond Yields should start falling soon, and CPI printed 2.4% on Thursday so this should help 10/30 yr yields come down too. 

Hoping Larry Fink, CEO Blackrock, is wrong when he just said we are already in a recession. 

Quote from @Ying Tang:

It's hard to predict. Federal Reserve would not want to cut rates before inflation is under control. No way inflation can come down in short term given the new tariff in place. 

 PCE last week was 2.5%, so looks like inflation already under control. Inflation will come down a lot more if we get a Recession.

10yr yield = risk of inflation change + risk of GDP growth change

10yr yield rose from September 18th from 3.6 to 4.8 not due to rising risk of inflation but due to FED cuts stimulating GDP growth in a falling inflation environment
10 yr yield falling since January 14th from 4.8 to 4.0 now due to massive fall in expected GDP growth (Atlanta FedNow at -3.7% for 1st quarter down from +2%) and this is believed by most economists to be due to anticipation of Trump Tariffs crippling global trade, despite their increasing of inflation which would increase yields
So, recession or Trump-Cession is the fear. JP Morgan just raised recession risk to 60% for this year, 2 hours ago. Recession is not good for CRE, no matter how low the 10yr yield.
The tariffs announced last night were much higher than what he said on campaign trail or even put into effect 2 months ago, so market having to digest this today.

Also Stock Market and Bond Market are not that correlated, many people say when people sell stocks there is a flight to safety into bonds lowering 10yr yield. But in 2022, sp500 fell 25% and qqq fell 35% but 10 yr yield went from 1.5% to 5% due to rising inflation/growing GDP. Today 10yr yield falling due to fear of recession, not flight to safety. Also, Oil down 7% today due to fear of recession too.