These types of deals where investors pool their money and buy a large complex are at times risky. The sponsor is everything. Their track record and maintained ownership in one position is a must.
Unfortunately for the sponsor, this is a business transaction and all they want to do is make money. When I did the deep research on 1 of these investments this is what I found out.
The "sponsor" used an LLC and purchased a Hotel under a different name. The place lost the Sole Tenant who ran the Hotel and paid the owner rent. He sponsor got a temporary tenant, another of his LLC's, to run the place. Instead of it being empty and worthless, it was a going operation.
When the place was going to be empty he purchased it for 12 Million. Rented it to himself under another LLC and began fixing it up. A coat of paint, a few guests and then he found a real tenant to take over the management.
Once he had a signed lease he then purchased the Hotel again from himself to another LLC, but this time he paid himself 18 million dollars.
Then he advertised this as an Investment. He stated it cost 18 million, plus fee's. His finders fee, his put the deal together fee. His sales force to find investors making on top of that a commission. Final sales price sold in small lots, $21 million.
The guy make so much money pulling the wool over every one's eyes that he didn't care if this ever made anyone any money. It would take 10 years for the investors to break even and another 10 years to make some real money.
Then the sponsor sold out his position as retirement money investments at $25,000 per share, leaving him with no teeth in the game.
This was a bad deal.
One good deal, A long time sponsor purchased an apartment house in collage area. Managed it well and the investors tripled their money in 6 years. He got to from a company that was leaving the apartment market and wanted out... --47.155.xx.xxx