All Forum Posts by: Paul Azad

Quote from @Terra Padgett:

Quote from @Paula Impala:

I invested in Norada Capital Management and was coming here to connect with others who have invested. Did not receive my payment from Norada this month (June) and just received the following notification in my email.

Any thoughts or recommendations from fellow investors.  Thank you in advance for any advice or insight.

Dear Valued Investor,

I hope you are well. As a lender (aka “Maker”) to Norada, you are a valued member of the Norada family.
The purpose of this correspondence is to provide you with an update on the repayment under the terms of the promissory note (“Note”) as an obligation of Norada Capital Management, LLC (“Norada”).
As with all businesses, Norada is subject to market factors that could impact its ability to make payments. Due to current market conditions and unforeseen financial challenges, we have decided to temporarily suspend distribution payments. This decision was not made lightly and comes after thorough deliberation and analysis of our current financial position.
This requires us to exercise our right to convert your Note and issue equity (aka membership interests) in Norada. You will recall that your Note allows Norada to convert the outstanding balance owed into equity and that it can redeem that equity in the future by repayment of the Note principal in full. There is nothing required by you related to your Note being converted. It happens automatically upon notice being sent.
As such, this email will provide you notice that Norada has chosen to exercise its right under the Note §6 to issue equity to you in Norada. Your equity is valued at the unpaid face value of the Note plus any accrued but unpaid interest. We expect to be in a position to redeem your interests in short order, and we will keep you posted, as always, on any developments in this regard.

We understand the importance of distributions to our investors and recognize the impact this decision may have on your financial planning. Please be assured that this suspension is temporary. We are committed to resuming regular distributions as soon as our financial situation stabilizes and improves.

Our primary goal is to ensure the long-term stability and sustainability of our business. By temporarily halting distributions, we can preserve capital, manage our resources more effectively, and invest in key areas that will drive future growth and profitability.

In the interim, we are taking strategic steps to strengthen our financial health, including cost-reduction measures, revenue-generating initiatives, and debt restructuring options. Our management team is dedicated to navigating through these challenges and emerging stronger.
We greatly appreciate your understanding and patience during this time. We remain committed to transparency and will keep you informed of any significant developments. If you have any questions or need further clarification, please feel free to contact me directly. (I will do my best to reply to your email in a timely manner.)
Thank you for your continued trust and support.
Sincerely,

Marco SantarelliFounder & CEONorada Capital Management

I hate to see/hear this. We looked at investing in the Norada Notes last year with my Investment Club. It was an unsecured note NOT backed by any real estate or hard asset. But rather how we understood it, the note was tied to the performance of previous Brick & Mortar stores that Norada said were performing well as online e-commerce stores now. We requested to see financials as part of our due diligence (numerous times), however they declined to provide anything saying that since they were a private company they didn’t provide financials. They offered to provide projections or a pro-forma. That was not acceptable to us as projections wouldn’t tell us how the company or portfolio of companies have been performing to date or give us any confidence in the degree of certainty with their ability to repay the note. We didn’t believe those old online retailers were performing well and didn’t even know they were still around. We decided to pass on investing.
I hope this works out well for all in the end, but I would certainly be concerned with them converting a Debt Position to an Equity Position at discretion. Especially if it was just in the fine print. That should have been highlighted. You’re just bumping investors down to the very bottom of the capital stack. I’d rather they just pause distributions and pick back up once the “economic conditions” are sorted out. But they wouldn’t want to accrue that kind of interest with those 12-15% notes. Again, I hope it works out well for all once all is said and done. 

They were offering up to 23% on their notes, and I've heard from a guy named Madoff that it's kinda hard to Pause distributions in the middle of a Ponzi scheme as SEC doesn't approve of irregular theft , sorry, distributions :)

Next time you come across a suspect investment or just poor quality or even just one with high fees, please POST to the BP Forum dedicated to this "Syndications and Passive Real Estate Investing.", may help some less savvy investors. 

Quote from @Nate Marshall:

It is never a bad time to invest in real estate. The issue is with people that don't have the ability to analyze, structure and underwrite opportunities so they close on time and become successful acquisitions! 

Never a Bad Time? Hold on, I have 2021/2022 on the phone for you, they're asking if you are interested in a 100 unit 1960's Vintage Multi-Fam property called "The UnderWater" at a 3.5% Cap rate....Wait, Blackrock just said "Hold my Beer" and offered all cash at a 3Cap, something about subway tile Backsplash should double NOI in 3 months.

perhaps modify "It is never a bad time to invest in real estate." to "at a good price". :) jus playin'

Financial scams can be Exploitative of people's emotions and the shame in admitting to family and friends that they were duped when typically the investors are felt in their family and friend groups to be the most financially savvy and therefore less capable of getting exploited. For example, Bernie Madoff started his Ponzi in the mid 1970s and it ran until December of 2008 and very few people ever took out their money even after it collapsed. Unfortunately, they only recovered 14.1 billion of the 42 billion he stole. People blithely received their 14 to 15% yearly whether markets were up or down and they never wanted to peer behind the curtain to see what was going on. And many of these investors were extremely sophisticated and savvy hedge funds and pension funds, including hundreds of educated retirees and professors and mathematicians and people with long careers in finance. Some investors did know it was a Ponzi, and actually blackmailed Madoff to get higher returns/payouts, but that was effectively stealing from the less savvy investors as well, so they became complicit with Madoff. some likely suspected but rode the Dragon as long as they could hoping to get out before it crashed, but that's an attempt to catch a falling knife, which never ends well. 

Sounds like the author is justifying a reason to overpay for something.

Isn't Brandon Turner the guy from Open Door Capital Fund? Which has now stopped investor distributions? And has many very unhappy limited partners on the syndication threads? From reading some of those threads, it seems like ODC was overpaying for commercial real estate in the last couple of years using floating rate short term maturity debt with limited rate cap insurance, and got caught when 10yr went from 2% to only 4.2%. You may not want to finish reading that book....

Dozens of threads on BP, like this of excessive risk leading to excessive losses, hopefully nothing illegal, and likely to be more if US slips into recession.  

I think BP is planning on a "Passive Pockets" link or area where maybe some resources to help educate passive investors can be collated, so investors in syndications/ mortgage notes/ even non-collateralized promissory notes can be explained/discussed/reviewed etc. Could be very helpful

From what Marco Santarelli wrote in a letter. 
Special Offer -- 17% Interest Promissory Notes (for a limited time) | PREI 442 – Passive Real Estate Investing
Norada Capital Management offers promissory notes based on 5 business Lines, none of which have anything to do with real estate or turnkey properties. He owns a completely separate Norada real estate investment management company unrelated to the promissory note company, Per his letter, they include three e-commerce businesses, one mastermind educational business, one Broadway musical production business including most recently, a production of a Neil Diamond Musical. (I love "Sweet Caroline") He also clearly states that none of the promissory notes are collateralized with assets from any of these five businesses. It seems doubtful the equity conversion he is offering note investors will have equal value but hopefully investors will recover some Or hopefully most of their Money.

Quote from @Judy Foster:

we too have tried a small investment in their notes and we got the same letter yesterday.  until that time, they had been paying 12% as promised.

 Hi,Judy, Norada Capital Management has been engaging in some higher risk ways of obtaining yield from what I've been able to gather from their website and researching them on Google. (e-commerce company that was looking into bankruptcy last year, mastermind businesses, putting on broadway type musicals, including one about Neil Diamond) Their website is fairly opaque as to how they generate their profits in order to pay note investors the very high yields they offer, 14-23%. Please check out this other thread on bigger pockets. about this issue. https://www.biggerpockets.com/forums/960/topics/1196567-nora...

Promissory notes in general, as they have no collateral, seem a bit higher risk, perhaps mortgage note investing which are backed by residential and sometimes even commercial real estate would be a safer alternative, and yet very lucrative, too,  8-12% yields

For extra returns, I put a small portion of my portfolio into BDCs, Business development companies, that specialize in loaning money to growing businesses which are too high risk to get loans from proper banks. So they can get much higher yields on those loans which they pass out to us stockholders in the form of dividend distributions. Over the past two years I've been averaging around 25 to 30% on these, a year since as interest rates Rise this causes an increase in the BDC's net interest margin or profits, so you get capital appreciation of the stock price plus 12 to 14 per cent year dividends paid out. Once interest rates start to head South will switch from BDC's to mortgage REITs whose underlying loan assets (agency debt) will increase in value as interest rates fall and should also generate 20 to 30% yearly returns. Since all these Companies are publicly traded, you can read their yearly 10K'S and quarterly 10q reports. which are very transparent as to how they generate their profits and what risks their seeing on the horizon. I'm also a bit afraid we may be going into a recession soon, so now buying lots of EDV (20-30yr US treasury Bonds, which will go up in value by 30% for every 1% drop in 30yr bond rate) Good luck.

David, please talk with a lawyer about this, there may be criminal, ie SEC violations, or at least civil claim you can bring. If you don't, you are kind of complicit in the all the crimes he may have committed since and in the future against others you don't even know about yet, which you could have helped prevent. A better world can only be made not granted. sorry if this sounds a bit harsh

Quote from @Calvin Thomas:

Quote from @Jay Hinrichs:

Norada is one of the largest and successful turn key Brokers in the US.. so equity in the company is probably a very good thing while they shore up whatever it is they need to shore up.

 I have a feeling that liquidation is just around the corner.  There are going to more and more of these coming down the pike as interest rates continue to stay high. Life is on easy street when rates are 2% or I.O.  Now, it's time to pay the piper.  Curious, are the executives suspending their salaries too?

These syndications are a scam. I've been saying this for years.

Norada Capital is not strictly a syndication, but rather was selling high yield non-collateralized promissory notes, guaranteed only by their private company for which they give no financial description of what the company does or how it makes money on their website (Marco does describe the business some in an article below). Other than listing a slew of defunct, bankrupt, former American corporations whose trademarks are now collectively owned by a single E commerce company, which itself I think filed for bankruptcy or a re-organization per wall street journal last year, sorry -Firewall

Retail Ecommerce Ventures, Buyer of Moribund Brands, Hires Advisers for Its Own Struggles

The retail venture behind RadioShack, Pier 1 Imports and other online brands has hired restructuring lawyers, according to people familiar with the matter

By Soma Biswas and Andrew ScurriaUpdated March 2, 2023 10:10 pm ET|WSJ PRO

another article from Silver law group, 

Retail Ecommerce Ventures (REV)

"The business model of Retail Ecommerce Ventures (REV) is to buy the rights to a bankrupt brick and mortar retail business’s intellectual property and relaunch the brands as online-only ecommerce brands. According to their website, the company’s holdings include RadioShack, Pier 1, Stein Mart, Linens-N-Things, and Modell’s Sporting Goods.

To raise capital, Retail Ecommerce Ventures turned to retail investors across the country. REV Co-founders Alex Mehr, a founder of the dating app Zoosk, and Tai Lopez, a self-help author, advertised heavily on YouTube and made media appearances, including on CNBC.

According to investors Silver Law Group has spoken to, REV claimed investors could earn up to 25% annual return by investing in the company’s unregistered private placements.

REV claims to have raised over $260 million. By late 2022, investors stopped receiving payments and were solicited for more money to help them avoid bankruptcy.

In early 2023, retailer Tuesday Morning filed for Chapter 11 bankruptcy, which was only months after REV purchased a controlling stake in the company for $35 million. Many of REV’s brand websites appear to have limited or outdated merchandise for sale, and some sites look like they haven’t been updated regularly. In December, 2021 REV claimed it would be relaunching RadioShack as a cryptocurrency exchange. Currently there’s nothing about cryptocurrency on the site."

so looks like REV paying investors/feeder fund like Norada 25%, Norada paying note investors 12-15%, Pyramids are great real estate but not good investments. REV defaulted to investors late 2022, sounds like Norada heavily invested in them from Norada's website listing all the exact same companies owned only by REV, below is article from Marco, pitching somewhat frantically in August '23, How he will increase the interest rate? he is offering to bump his offer from 12 and 15% to 14%and 17%. And if you invest more than 200K you will get an extra 5% bonus at the end for a total of 23% returned in your final year. But you have to act now, very quickly before the end of August to get the special deal! says he invests note funds into 3 e-commerce businesses and 1 Mastermind business and 1 Business that puts on Broadway Musicals. He also focuses on getting investors to use their IRAs, or retirement funds to invest. You can judge the ethics of that request yourself to put into these rock-solid businesses above. 

Special Offer -- 17% Interest Promissory Notes (for a limited time) | PREI 442 – Passive Real Estate Investing

This is starting to sound like the plot of that movie "The Producers" with Gene Wilder.

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!

• Norada Real Estate Investments
• https://www.NoradaRealEstate.com

Marco Santarelli

• Specialist
• Orange County, CA

Replied a year ago

Quote 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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• Norada Real Estate Investments
• https://www.NoradaRealEstate.com

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.