NRIA.NET - Real Estate Private Placement - 16% return

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aqan
Posts: 334
Joined: Fri Nov 06, 2015 7:07 am

NRIA.NET - Real Estate Private Placement - 16% return

Post by aqan » Tue May 15, 2018 9:52 pm

After hearing their commercial for many years on Bloomberg I decided to call them to find out more. In a nutshell they are real estate developers, and offer 16-20% return on your investment of multiples of 50K. You're pretty much locked in for 5 years and WILL lose all your money if the market tanks.

I know I will have hard time convincing the lady but first wanted to hear what bogleheads think about this crazy idea?

here are some details

For over a decade, NRIA has delivered and continues to build upon a history of exceptional performance as a vertically integrated investment, management, and development firm. We have extensive experience in ground-up construction and complete renovation of planned unit townhome, luxury single-family residential, condominium, multifamily and commercial mixed-use rental development. All of our investment opportunities are strategically located in many of the most dynamic urban markets along the East Coast; to include Brooklyn, Northern NJ / NY Metropolitan area, Center City Philadelphia PA and Palm Beach County FL.

The cost per financial unit in this offering is $50k per unit. Your target returns per investment unit purchased are:
Return Options
· 1 unit = $50k - 16% IRR

· 2 units = $100k - 18% IRR

· 3 units = $150k - 20% IRR

· 20% is the max. return offered


Term and payout
· 5 yr. term - (limited liquidity available after 30 months)

· 6% of your IRR is annualized and paid monthly in years 1, 2, 3 & 4 (the remaining return accrues for payout in year 5)

· Your cash flow starts the month following payment (Check received March, first monthly payout – Mid April)

· In year 5, your investment is “trued up” to your targeted returns of 16-20%, plus the return of your principal upon liquidation of real estate portfolio

· The majority of the return will receive capital gains treatment

· 100% of free cash flow is dedicated to you first as an equity partner before National Realty takes a profit

· Regardless of actual net sales proceeds achieved, investors are guaranteed a minimum of 12% IRR and the full return of principal invested. (See Appendix C).


Additionally, each of the properties has been strategically handpicked for this Portfolio for their unique profit producing contribution e.g.
· 97 unit cash flowing apt building with 13k Sq. Ft of commercial space at street level

· 30 luxury unit condo build & flip with a parking deck and 8k Sq. Ft of commercial space at street level

· 55 luxury unit condo build & flip with 3 car parking per unit, overlooking the Hudson River and Mid-town Manhattan

· 40 unit cash flowing apt building to be completed July 2018

· 14 luxury beachfront townhomes build & flip with roof decks, pool, and 2 car garages

There will be detailed financial overviews of each project as final financing is approved (see the attached financial overviews for the approved target properties)

These properties are purchased for cash, at a 75% discount to development value giving National Realty and our investors a secure financial advantage. Additionally, each project is thoroughly vetted including alternate exit strategies to ensure safety & profitability.

To ensure the success of each project National Realty sets aside funds at the purchase closing needed for Senior Lender Interest Reserve, Fees, and Investor Monthly Payments. We also provide exclusive guarantees that thoroughly manage your risk exposure. They are designed to safeguard investors during construction & resale stages, protecting your projected income & full return of capital.

This is a limited partnership real estate offering and a perfect diversification to stocks. It is also a very desirable investment for retirement accounts.

https://www.dropbox.com/sh/tsn1gyuv2p5d ... AUGea?dl=0

Remember – You must be an Accredited Investor to make this investment. You must qualify by proving a net worth of $1M, Or $200,000 income for the last two years ($300 if joint), Or have your accountant or attorney sign an “Accredited Investor” letter stating that your finances are known to them and you qualify as an accredited investor (a template of that is also in the above link).

ThrustVectoring
Posts: 376
Joined: Wed Jul 12, 2017 2:51 pm

Re: NRIA.NET - Real Estate Private Placement - 16% return

Post by ThrustVectoring » Tue May 15, 2018 11:36 pm

How do you think they can afford to pay for the commercials you saw?

As a rough rule of thumb, the more folks try to market to me the less I'm interested in investing with them. Just stick with index funds and be happy with the returns the market provides.

runner3081
Posts: 1259
Joined: Mon Aug 22, 2016 3:22 pm

Re: NRIA.NET - Real Estate Private Placement - 16% return

Post by runner3081 » Tue May 15, 2018 11:42 pm

Is this an infomercial for the company?

Independent George
Posts: 236
Joined: Wed Feb 17, 2016 12:13 pm

Re: NRIA.NET - Real Estate Private Placement - 16% return

Post by Independent George » Wed May 16, 2018 12:01 am

So, if I'm reading this right...

1. Investor gives them a minimum of $50k in cash.
2. They use cash from investors to build/flip/rent real estate in expensive areas of the east coast.
3. They return an increasing % back to you based on how much money you sink in.

Seems like a scam to me - how exactly does anyone guarantee a 12% return? Does paying money into the company grant you an ownership stake in the properties they supposedly own and are developing? If not, why would anyone seeking capital for investments pay out a minimum of 16% annualized for what basically amounts to a 5-year unsecured bond? What the heck kind of profit margins are they expecting if they can afford to pay that much out to their investors?

Honestly, this sounds like a ponzi scheme - take in $50k, pay out $8k back to the 'investor' and pocket the rest, get him to convince his friends to 'buy in'. If you reel in enough new players, you can keep it going on for a few years before your investments 'crash', file bankruptcy, then disappear.

GibsonL6s
Posts: 199
Joined: Tue Aug 29, 2017 12:17 pm

Re: NRIA.NET - Real Estate Private Placement - 16% return

Post by GibsonL6s » Wed May 16, 2018 12:12 am

I do RE for a living. As I have said before control is everything in real estate. I would never invest passively in a real estate deal ie one I did not control. Also I am sure they are not a benevolent society meaning high fees. I would steer clear.

aaronl
Posts: 344
Joined: Thu Apr 03, 2008 8:54 pm

Re: NRIA.NET - Real Estate Private Placement - 16% return

Post by aaronl » Wed May 16, 2018 12:18 am

Independent George wrote:
Wed May 16, 2018 12:01 am
So, if I'm reading this right...

1. Investor gives them a minimum of $50k in cash.
2. They use cash from investors to build/flip/rent real estate in expensive areas of the east coast.
3. They return an increasing % back to you based on how much money you sink in.
That's essentially correct.
Independent George wrote:
Wed May 16, 2018 12:01 am
Seems like a scam to me - how exactly does anyone guarantee a 12% return?
The use of the word "guarantee" here is a bit distasteful. What they mean is that limited partners are entitled to 12% IRR before the sponsors get any residual profit. Returns may fall well short of 12%.
Independent George wrote:
Wed May 16, 2018 12:01 am
Does paying money into the company grant you an ownership stake in the properties they supposedly own and are developing?
This sounds like preferred equity, so yes. Your upside is capped at 16% or whatever number you agree on. Management takes the rest if there are funds left over.
Independent George wrote:
Wed May 16, 2018 12:01 am
If not, why would anyone seeking capital for investments pay out a minimum of 16% annualized for what basically amounts to a 5-year unsecured bond?
As you might imagine, it's a very risky investment (see below). Offering a preferred return of 10%-12%, plus some share of the upside, is typical for this kind of deal.
Independent George wrote:
Wed May 16, 2018 12:01 am
What the heck kind of profit margins are they expecting if they can afford to pay that much out to their investors?
These deals are generally heavily leveraged. The leverage magnifies profits and losses. The debt carries a lower interest rate than the preferred equity because it has a first lien on the property. If the project does well, management and the equity investors will divide the spoils. If not, the equity investors may lose their entire investment.
Independent George wrote:
Wed May 16, 2018 12:01 am
Honestly, this sounds like a ponzi scheme - take in $50k, pay out $8k back to the 'investor' and pocket the rest, get him to convince his friends to 'buy in'. If you reel in enough new players, you can keep it going on for a few years before your investments 'crash', file bankruptcy, then disappear.
Probably not a ponzi scheme, but definitely a very risky leveraged play. I don't like the fact that this partnership is marketed to the public, or the way the marketing copy emphasizes best-case returns and waves around a supposed guarantee.

WanderingDoc
Posts: 634
Joined: Sat Aug 05, 2017 8:21 pm

Re: NRIA.NET - Real Estate Private Placement - 16% return

Post by WanderingDoc » Wed May 16, 2018 12:25 am

I do both active and passive real estate investing.

Agree with the last guy, control is everything. However, in the current overall market, investing in passive large apartment syndications has done very well for me.

In my passive investments, I like an 16-18% IRR and call it a day. For active investments, my worst is a 30% IRR on a leveraged deal. A couple of deals I pulled out all my initial capital, so the return is now "infinity" or undefined, whichever you prefer. That said, active real estate requires significantly more time and work.

Once the market corrects, I'll jump back onto some active deals to add to the portfolio. However, large apartment syndications imvested totally passively I am a huge fan of lately.

And by the way, it seems like they are offering/guaranteeing a 12% preferred return. I can almost guarantee to YOU that this is a lie. If you read the PPM, it will be protecting the sponsor in 98% of the language. You aren't getting a 12% preferred return. If they say you are, these are not professional or experienced operators. A preferred return of 6 or 8% is actually very good.
I'm not looking to get rich quick (crypto), I'm not looking to get rich slow (index funds).. I'm looking to get rich, for sure (real estate).

Valuethinker
Posts: 34680
Joined: Fri May 11, 2007 11:07 am

Re: NRIA.NET - Real Estate Private Placement - 16% return

Post by Valuethinker » Wed May 16, 2018 4:48 am

aqan wrote:
Tue May 15, 2018 9:52 pm
After hearing their commercial for many years on Bloomberg I decided to call them to find out more. In a nutshell they are real estate developers, and offer 16-20% return on your investment of multiples of 50K. You're pretty much locked in for 5 years and WILL lose all your money if the market tanks.

I know I will have hard time convincing the lady but first wanted to hear what bogleheads think about this crazy idea?
If you make money on this, it will be by pure luck.

You are going to be paying big fees, to someone else, for them to do with your money what they see fit, with no guarantees to you.

If in poker, you can't figure out who the mug is, then you're the ...

Valuethinker
Posts: 34680
Joined: Fri May 11, 2007 11:07 am

Re: NRIA.NET - Real Estate Private Placement - 16% return

Post by Valuethinker » Wed May 16, 2018 4:50 am

aqan wrote:
Tue May 15, 2018 9:52 pm


This is a limited partnership real estate offering and a perfect diversification to stocks. It is also a very desirable investment for retirement accounts.

https://www.dropbox.com/sh/tsn1gyuv2p5d ... AUGea?dl=0

Remember – You must be an Accredited Investor to make this investment. You must qualify by proving a net worth of $1M, Or $200,000 income for the last two years ($300 if joint), Or have your accountant or attorney sign an “Accredited Investor” letter stating that your finances are known to them and you qualify as an accredited investor (a template of that is also in the above link).
Amazed they can get away with that much sales language in promotion of an investment product.

Of course this is not being marketed in 2010 when the RE market was more or less at the bottom, but in 2018 when it has recovered most of what it lost in the Crash (depending upon location and type of property).

grok87
Posts: 7922
Joined: Tue Feb 27, 2007 9:00 pm

Re: NRIA.NET - Real Estate Private Placement - 16% return

Post by grok87 » Wed May 16, 2018 7:26 am

GibsonL6s wrote:
Wed May 16, 2018 12:12 am
I do RE for a living. As I have said before control is everything in real estate. I would never invest passively in a real estate deal ie one I did not control. Also I am sure they are not a benevolent society meaning high fees. I would steer clear.
I think the “high fees” comment is the key. Here is one of the quotes from the OP

“100% of free cash flow is dedicated to you first as an equity partner before National Realty takes a profit”

Note the word “free”.! The thing to realize is That this is like Hollywood movie accounting. National realty is probably going to be making a ton of money on fees and will thus be suppressing the “profit”. So you are not aligned with them.

Just like a smart Hollywood actor tell them you want a percentage of the gross not a percentage of the net!
"...people always live for ever when there is any annuity to be paid them"- Jane Austen

aqan
Posts: 334
Joined: Fri Nov 06, 2015 7:07 am

Re: NRIA.NET - Real Estate Private Placement - 16% return

Post by aqan » Wed May 16, 2018 6:07 pm

Independent George wrote:
Wed May 16, 2018 12:01 am
So, if I'm reading this right...

1. Investor gives them a minimum of $50k in cash.
2. They use cash from investors to build/flip/rent real estate in expensive areas of the east coast.
3. They return an increasing % back to you based on how much money you sink in.

Seems like a scam to me - how exactly does anyone guarantee a 12% return? Does paying money into the company grant you an ownership stake in the properties they supposedly own and are developing? If not, why would anyone seeking capital for investments pay out a minimum of 16% annualized for what basically amounts to a 5-year unsecured bond? What the heck kind of profit margins are they expecting if they can afford to pay that much out to their investors?

Honestly, this sounds like a ponzi scheme - take in $50k, pay out $8k back to the 'investor' and pocket the rest, get him to convince his friends to 'buy in'. If you reel in enough new players, you can keep it going on for a few years before your investments 'crash', file bankruptcy, then disappear.
yes that's mostly correct.. except they don't just use cash from investors, the use the investor cash as equity (or down payment) and go to the bank to get a mortgage/loan.
I wouldn't call it a scam, you and the bank hold the deed but it's highly leveraged so if the real estate market folds, the bank will claim the property and you lose everything.

aqan
Posts: 334
Joined: Fri Nov 06, 2015 7:07 am

Re: NRIA.NET - Real Estate Private Placement - 16% return

Post by aqan » Wed May 16, 2018 8:29 pm

grok87 wrote:
Wed May 16, 2018 7:26 am
GibsonL6s wrote:
Wed May 16, 2018 12:12 am
I do RE for a living. As I have said before control is everything in real estate. I would never invest passively in a real estate deal ie one I did not control. Also I am sure they are not a benevolent society meaning high fees. I would steer clear.
I think the “high fees” comment is the key. Here is one of the quotes from the OP

“100% of free cash flow is dedicated to you first as an equity partner before National Realty takes a profit”

Note the word “free”.! The thing to realize is That this is like Hollywood movie accounting. National realty is probably going to be making a ton of money on fees and will thus be suppressing the “profit”. So you are not aligned with them.

Just like a smart Hollywood actor tell them you want a percentage of the gross not a percentage of the net!
thanks I will ask my guy what on earth "free" cash flow is.

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