When the market was good, you invested in a real estate syndication investment, and now times have changed: Distributions stopped, rent growth vanished, prices declined, expenses increased, and the loan came due.
And now the investment sponsor has disappeared. You haven’t received investor updates, quarterly reports, or even K-1s. You’ve called and written, but no response. What do you do?
Stopped distributions alone don’t necessarily mean the deal has failed; there could be a good reason. However, stopped distributions coupled with stopped communication are giant warning signs. If you don’t know why distributions have stopped, you are left wondering if you’ve been scammed or if the sponsor abandoned the investment and fled the country.
If you find yourself in this situation, do these seven things to determine what’s going on with your investment.
1. Rule Out Technical Difficulties
Before you make any wild assumptions, first rule out technical difficulties. In the age of social media, emails, and text messages, it’s surprisingly common for technology to get in the way of communication. Maybe the sponsor has been issuing updates, but you simply aren’t receiving them.
Verify that the sponsor has your correct email address and phone number. Check your spam email folder for messages that may have been trapped. Then, check your other email folders to see if any email processing rules are moving their messages out of view. Some email…