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Ripoff Report would like to let readers know that Ripoff Report emailed this customer so the member business could make things right with them. When a business joins the Corporate Advocacy Program, Ripoff Report emails everyone from the past so the member business can make things right with them. Of course, everything within reason. In order to confirm that the complaints were resolved, Ripoff Report is copied on all responses so we can insure that the member business did right by their customer. The author of the Ripoff Report below never responded to our offer to help them.
STATEMENT FROM NORADA REAL ESTATE INVESTMENTS:
The person's issue was addressed in detail in my response on the site.
NOW TO THE ORIGINAL REPORT THAT WAS FILED
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On July 23rd, 2004, I received an email that was forwarded to me by a friend named Ian Sanchez. The email explained the steps necessary to begin investing with Marco Santarelli of 360 Enterprises DBA Norada Real Estate, 30251 Golden Lantern, Suite E-261, Laguna Niguel, CA 92677 in a pre-construction program in Cape Coral, Florida. This outlines the events between that day and 4/26/07. In brief, I agreed to supply the credit for construction loans and pay a management fee of $1,500 per property for ten pre-construction houses to be built in Cape Coral, FL, to Marco Santarelli of Norada Real Estate. In exchange, Marco agreed to coordinate the entire project as a hands-off investment with no payments due until the sale of the property. Marco was to find and procure lots, find builders and hire the home builder, real estate agents, mortgage brokers, and anyone else needed to bring these projects to completion. Marco accepted my check for $15,000 for the management fees for all ten properties. He assured me they would all be started within 6-8 weeks and completed in 8-11 months. After 2 years and 9 months we had bought three lots, only two of which we built houses on. The agreement was spelled out in a joint Venture agreement, although through the course of the project Marco asked me a few times to sign a new management agreement; I never did because it stated a higher management fee than what we originally agreed to. Promises 1)Management fee of $1,500 per property for ten properties. 2)It will take 8-11 months to find, build and sell all ten properties. 3)Investor (thats me) incurs no out of pocket expenses (except builder deposit and appraisal) during project. 4)Marco would handle all details (arranging agents, builders, lenders, etc). 5)Marco would keep an accounting of each property 6)Investor would only have to qualify one time for the entire project 7)Late payments from construction loans dont show up on investors credit report Problems: 1)Manager actually charges $1,800, $6000, and $7000 respectively for first, second and third property, and refuses to refund any more than $3,200 (Interestingly enough, the manager thought I had paid $18,000 originally when I had only paid $15,000. This is just one of many instances that point to the ineptness displayed by Norada Real Estate in managing these properties. The rest are outlined in the attached table. 2)We suffered through the following timetable and buy only three properties total. Address Time* until Contract Time* until Construction began Time* to CO Time* to Sale 1104 NE 36th St 8 weeks > 12 months 25 months 27 months 1405 NW 9th Ter 24 weeks Never began N/A 21 months 236 NW 22nd Pl 60 weeks 4 months 30 months N/A still own *All times are from the beginning of the project 7/2004 Promised time to construct and sell ten properties: 8-11 months Interest expenses after 11 months were therefore unexpected and came directly out of profits 3)Every payment to my lender was late (we therefore paid an unnecessary late fee every month). After about a year after originating the first two loans I started receiving statements from my lender and the builder stating that mortgage payments were due and I had to pay them (which I did with some help from Marco). The third property Marco eventually walked away from and left me and my partner with all the expenses on a vacant house that we cant seem to get sold (we still own it). To date I have paid 14,366.66 in expenses. These increases daily. So much for no out of pocket expenses. 4)I was constantly on the phone or in other contact with agents, lenders, the builder, title companies, county officials, and other investors doing things that were definitely the managers responsibility (arranging loan extensions, getting comps, qualifying and re-qualifying for loans, determining reasons for building delays, posting for sale signs, following up on contracts and closing dates, etc, etc). 5)I never received a K1 or any other type of financial update from the manager. The manager never knew what lender we were using, when our maturity date was, if/when we were getting or needing a loan extension, how much the loan extension cost, even whether or not we still owned any specific property. The manager also did not know that, after a year owning two lots, the builder had not even broken ground yet. 6)I sent in at least 6 uniform loan applications over the course of our project 7)I now have late payments from my construction loans (>30 days) on my credit report and a significantly lower score (these were payments the manager agreed to pay). William cape coral, Florida
U.S.A.
1 Updates & Rebuttals
Norada_real_estate
Laguna Niguel,California,
U.S.A.
Response
#2UPDATE EX-employee responds
Wed, October 24, 2007
For the sake of accuracy and clarity, it must be pointed out that any reference to Marco is in fact with 360 Enterprises one of the corporations under the Norada brand that held the Management Agreement related to your investment.
Several additional points of clarification related to your post are in order:
1. If you reference your agreement you will note that the $1,500 was never a management fee or down payment. You will also note that the agreement clearly states that the $1,500 are the initial funds required and that you may be required to come up with additional funds upon request (should investment/construction costs increase, for example).
2. There can never be assurances that lenders will allow you to finance 10 properties at the same time. There was a time when you first started that this was possible given that there were multiple lenders that could be utilized simultaneously. However, as we clearly see today, lender programs and terms can change frequently and at anytime. As you will recall, the bulk of the wait was in getting financing for you. In fact it reached a point where you had to bring in a partner to try and stay ahead of the ever changing lending programs.
3. There was no additional cost to you with the management agreement. It simply replaced the original agreement which was only intended to be a short-term interim agreement while the attorney finished drafting the actually Management Agreement.
4. Addressing the Promises' section (in order):
i. Again, the $1,500 was not a management fee. See # 1 above.
ii. I took about 9 to 12 months to build each property individually not collectively. The start date is specific to each individual property.
iii. Again, if you re-read your agreement you will clearly see that additional costs may be incurred.
iv. This was handled accordingly.
v. Reports were provided upon request.
vi. Qualifying once applies per lender, not per property. This has always been true with mortgage financing.
vii. This would never have been a promise how can you believe that a late payment would not be reported to the credit bureau.
5. Addressing the Problems' section (in order):
i. You had been emailed a breakdown of account (the $18,000 was likely a typo). As noted above, costs can, and had, increased on those investment programs.
iii. Payments during construction were made directly by the builder. There was approximately 12 months worth of construction interest allocated by the lender upon financing. That usually provides enough to allows he builder to finish construction. If the builder takes longer than that, it is the responsibility of the borrower to continue making interest payments. Many builders during those boom years were taking longer than 12 months to complete a house.
iv. Much of the time you spent on your own accord was duplicating work the company had already done. Of course there are some tasks that only you could do, such as dealing with the lender regarding the loan modification or refinance.
v. K1's are not issued until the termination of the agreement.
vi. Again, this is clear evidence that the lending environment tightened up and was in a constant state of flux with the loans required for those investments.
vii. Those payments were to be split equally after the certificate of occupancy was issued. Payments to the lender are always made by the borrower in a timely manner to avoid any mortgage lates, they are not made by the manager.
I can truly empathize with your situation. It has been an unfortunate time in the market for many people. The slow markets, rising interest rates, and lack of lender confidence have created increasing difficulty for real estate professionals at every level.
Market conditions turned quickly and there was no way of contemplating the effects the softening market would have. 360 Enterprises did everything it could to service the management agreements up until the point where it could no longer continue, and after struggling for 12 months was forced into bankruptcy.