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Losing it all to foreclosure
Welcome back!
I started this publication to share LP lessons in an anonymous way to benefit the reader. Once in awhile, such lessons are made public by the LP themselves and I would like to dive in to such an example here. The goal is to help you avoid situations like this:
Today we will discuss how an LP invested in a syndication, funded a capital call when things went south, and then lost it all in the end. To make matters worse, there was a tax surprise in the end as well. If you’ve been through (or currently going through) a similar situation, reach out by replying to this email. Also remember that at least some lessons from the loss are on you (as LP) to learn. In other words, you can blame the GP / market conditions (and you would be right), but there’s also at least a small component of due diligence that you might have missed. Learning these lessons now will serve you well into the future.
I hope this will help remind people that, although real estate can provide incredible returns, it’s far from risk free on an asset by asset level. You really need to understand what you’re investing in, and if you don’t (or don’t have time to ask the right questions) … don’t invest.