37th Parallel Properties

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pmardo
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37th Parallel Properties

Post by pmardo »

Has anyone invested with 37th Parallel Properties? https://37parallel.com/ If so, what has your experience been with them?
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quantAndHold
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Re: 37th Parallel Properties

Post by quantAndHold »

I’m having trouble parsing the website. Is this a private REIT?
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Pajamas
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Re: 37th Parallel Properties

Post by Pajamas »

Never heard of them but it is "direct fractional ownership" of apartment complexes open only to accredited investors. I wouldn't want to invest in something that isn't publicly traded, myself. Looks like they mostly buy old apartment complexes in need of upgrades. Also looks like their main business is selling real estate to investors, not real estate, judging from the information about their employees.
quantAndHold wrote: Sat Apr 21, 2018 7:08 pm I’m having trouble parsing the website. Is this a private REIT?
The "fine print" at the bottom of the website's pages is much more informative than the primary content.
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arcticpineapplecorp.
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Re: 37th Parallel Properties

Post by arcticpineapplecorp. »

Always best to read the prospectus, or bearing no such thing, at least the disclaimer on a company's website (at the bottom of the first page). There they say:
37Parallel.com is intended for accredited investors only who are approved 37th Parallel investors and familiar with and willing to accept the risks associated with private investments. Securities sold through private placements are not publicly traded and are intended for investors who do not have a need for liquidity in their investment...

Investment opportunities posted on this website are "private placements" of securities that are not publicly traded, are subject to holding period requirements, and are intended for investors who do not need a liquid investment. Private placement investments are NOT bank deposits (and thus NOT insured by the FDIC or by any other federal governmental agency), are NOT guaranteed by 37th Parallel Properties Investment Group, LLC or Wealthforge, and MAY lose value. Neither the Securities and Exchange Commission nor any federal or state securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through the website. Investors must be able to afford the loss of their entire investment.

Investors should conduct their own due diligence, not rely on the financial assumptions or estimates displayed on this website, and are encouraged to consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks associated with any investment opportunity.

source: https://37parallel.com/
That pretty much tells me everything I need to know. A non-publicly traded "private placement" that's illiquid and dare I repeat, non-publicly traded (which means you have no access to information about this company really unless you're an insider) and for accredited investors only (read: those with enough money that if they lose all the money they invest with this company, they'll be ok". Doesn't pass my smell test. I would definitely pass.

If you're interested in real estate buy a REIT index fund from Vanguard. It's low cost, well diversified, publicly traded and highly liquid. What more can you ask for? Or you can believe what they say about scaring people away from a REIT index fund:
A REIT (Real Estate Investment Trust) is basically real estate flavored stock and is highly correlated to the performance of the stock market. As direct fractional investors, 37th Parallel clients are protected from that volatility.
That's like saying a pineapple and an apple are "basically" the same because they're both fruit.

And I'm so sure there's no volatility whatsoever with 37th parallel. There's also a lack of liquidity which is kind of important.
Additionally, direct fractional ownership provides investors access to all of the tax advantages that are unavailable to REIT Investors.
If I want a tax advantage I can just put my REIT index fund in my tax deferred or tax-free Roth account, now can't I?
Most importantly, 37th Parallel investors have the ability to choose which projects they invest in. REIT investors rarely have a choice in the projects the REIT decides to purchase.
Why would I want to choose my own projects? What do I know about real estate? That's why I'm "trying to" buy a diversified fund that invests in real estate. I'm trying to profit from those who know more about real estate than I do.
Last edited by arcticpineapplecorp. on Sat Apr 21, 2018 9:16 pm, edited 1 time in total.
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jminv
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Re: 37th Parallel Properties

Post by jminv »

Articpineapplecorp's response was great. Only thing I'd add is that on the main page they have a real estate returns vs S&P 500 returns since 2000 but those real estate returns have nothing at all to do with this company's actual results and I don't see what their actual start date was. That's extremely misleading which is the point - they exist to sell to you. They then say that all of their investments have been profitable which really doesn't tell me anything particularly given I don't see their formation date.

Seems like two management consultants got bored at their jobs/wanted more money, or suffered the up or out fate, and decided to sell illiquid real estate offerings to the public with misleadings statistics. They then put a doctor on the board so they could more easily sell their offering to other doctors, hired some more sales people to target other professionals, and went to work.

If you're interested in real estate outside of your own residence, I'd invest in a liquid REIT in a tax defered account. It's funny they say their illiquid fractional ownership is superior to, err, liquid fractional ownership through shares in a REIT.
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arcticpineapplecorp.
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Re: 37th Parallel Properties

Post by arcticpineapplecorp. »

I love this:
This webinar is 100% educational and will give you the information you need to make smarter investment decisions.
source: https://37parallel.com/learning-center/ ... m-webinar/
That's good, because I was concerned it would only be 63.7% educational.

I wouldn't even say bogleheads is 100% educational. Maybe more like 60% educational and 40% entertaining.

And with that in mind, my recommendation for bogleheads is to immediately institute...The Grandma Rule!
For every investment, we also add the “Grandma Rule.”

It may not sound overly sophisticated, but in our world of information overload, instantaneous decision making, and severe lack of corporate accountability, we believe it’s worth it.

For every project, before we sign the Purchase and Sale Agreement and again before we approve all due diligence, we pause and ask ourselves and each other… “Would we put our grandma’s last $100,000 in this deal?”

Please note, we don’t think anyone would advocate putting any amount of “last dollars” into anything but a liquid savings account, BUT it is a very useful construct.

It keeps our investment decisions centered on what’s most important – our clients.
source: https://37parallel.com/invest-in-real-estate/
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
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arcticpineapplecorp.
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Re: 37th Parallel Properties

Post by arcticpineapplecorp. »

But wait...it just keeps getting better. Three owners of the LLC (37th Parallel) dispute their ownership percentages in the company. The Chief operating officer Dan Chamberlain sued the Chief Executive Officer Chad Doty, Edward Bariskill (not sure who that is, perhaps one of the other owners) and 37th Parallel for not giving him what he believed was his share of the company (18%), summary of the suit here:

https://law.justia.com/cases/federal/di ... 313667/27/

and more detailed here:

https://www.leagle.com/decision/infdco20150522699

Funny thing is, even though Dan Chamberlain sued Chad Doty and 37th Parallel, Dan's still listed right on the website:

https://37parallel.com/about-37th-paral ... management

I guess because he's still a co-owner in the LLC. But geez that must be uncomfortable doing business there when the co-owners of the company can't even agree how much of the company each owns.

Why would you want to invest in this again?

Oh, now I see what's going on:
Barriskill says that "Doty is not adversarial to any dispute and agrees with everything that Chamberlain alleges in his complaint." (Dk. No. 16 at 7.) In other words, Doty wants Chamberlain to win the case. But whether Barriskill's allegations prove true, they remain irrelevant to whether Doty is a nominal party. See Hartford Fire, 736 F.3d at 260. Chamberlain initiated this suit to determine his ownership percentage of 37th Parallel. He obtained his eighteen-percent ownership of 37th Parallel by way of a reduction in Barriskill and Doty's ownership percentages. If Chamberlain succeeds in his declaratory judgment action, Doty will remain owning thirty-six percent of 37th Parallel. But if the defendants succeed in this action, Barriskill and Doty's ownership interests would expand to forty-five percent each. Doty has an immediate and apparent stake in the litigation—a nine percent swing in ownership of 37th Parallel—and is therefore not a nominal party. See id.
source: https://www.leagle.com/decision/infdco20150522699
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
Gemini
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Re: 37th Parallel Properties

Post by Gemini »

Funny I found this post! I just got a letter in the mail from this company inviting me to a local steak dinner...
bcg
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Re: 37th Parallel Properties

Post by bcg »

arcticpineapplecorp. wrote: Sat Apr 21, 2018 7:21 pm
A REIT (Real Estate Investment Trust) is basically real estate flavored stock and is highly correlated to the performance of the stock market. As direct fractional investors, 37th Parallel clients are protected from that volatility.
That's like saying a pineapple and an apple are "basically" the same because they're both fruit.

And I'm so sure there's no volatility whatsoever with 37th parallel. There's also a lack of liquidity which is kind of important.
Additionally, direct fractional ownership provides investors access to all of the tax advantages that are unavailable to REIT Investors.
If I want a tax advantage I can just put my REIT index fund in my tax deferred or tax-free Roth account, now can't I?
Most importantly, 37th Parallel investors have the ability to choose which projects they invest in. REIT investors rarely have a choice in the projects the REIT decides to purchase.
Why would I want to choose my own projects? What do I know about real estate? That's why I'm "trying to" buy a diversified fund that invests in real estate. I'm trying to profit from those who know more about real estate than I do.
This is an old thread but, I thought I'd share some information anyway.

First, the biggest tax advantage of these types of passive investments is depreciation, which can be used to offset other passive income. If you're dealing with a more sophisticated operator, they will do cost segregation which will allow them to front load the depreciation. So as an example, let's say you invest $100,000 and get a 6% annual return or $6,000. In addition to that return, your share of the depreciation is $8,000. The depreciation wipes out the $6,000 in revenue you got and still leaves another $2,000 to use against other passive income, like stock dividends. REITs do not offer this.

These types of investments usually have 2 different strategies, depending on the operator and the goals. Some will buy, improve value (you can force appreciation in commercial real estate by increasing rents or lowering expenses) and then sell, others will refinance and hold the property. I prefer the buy, refinance and hold method because it returns your original investment capital (and probably some profit which is not taxable because it's debt) and continues to pay cash flow quarterly. Who wouldn't like to continue receiving cash flow from an investment that you no longer have any cash tied up in? In the model where the property is sold and the investor is repaid their investment and profit from those proceeds, the profit is taxable but, you can use a 1031 exchange to put those profits into another qualified investment and defer those taxes until you die, at which point the cost basis is reset so they never get paid.

If you don't feel you're qualified to do the due diligence on a specific property yourself, there are many funds available that use the investor money to purchase a pool of assets so that the investment is diversified and more protected.

While investing in registered securities and REITs can be a great way to build wealth, they have the one problem that they tie up the invested capital forever. While there is a period of time that an investment into a syndication is illiquid, the good operators return the investor capital, and typically some profit, in the 5 - 7 year range either through selling the asset (which is the same as selling the registered security) or by refinancing to pull the investor cash out and let the tenants pay the property off. Of course there is always risk with any investment so it's important to understand how the business plan is going to be executed but, real estate syndications are not inherently riskier than stocks. There are many examples of blue chip stocks that have lost much, or all, of their value. The most notable examples would be Enron or MCI/Worldcom but, over time as the world and technology changes many companies can see significant devaluation. Polaroid, Eastman/KODAK, Zenith, K-Mart, Sears, JC Penny, etc. Only 60 of the Fortune 500 from 1955 were still on the list in 2017. With a syndication, you get to personally vet the operator and management team, can call them if there is something you're concerned with and can also vet the individual property that's being invested in if you want to. None of that is possible with registered securities.

These sorts of investments certainly aren't for everyone but, for those that are willing to learn the industry and dig into the details of a deal, it's a good way to get above market returns consistently, move your money through investments instead of parking it in them and generate lifetime cash flow that will continue for generations even after you've gotten a return of your original investment capital. There is a reason that many of the people listed in the Forbes 400 have real estate as part of their wealth building and holdings.
curious george
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Re: 37th Parallel Properties

Post by curious george »

the lure of easy money keeps calling me - then i come here and read the groups' collective thoughts and i go back to keep it simple; invest long-terml dont try to beat the market. slow and steady - honestly, it's hard to not want to run as fast as you can.
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dratkinson
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Re: 37th Parallel Properties

Post by dratkinson »

Prospectus red flag: accredited investor. Recall from reading forum that "accredited investor" is a red flag in any prospectus for all novice investors. If you see it, don't buy the investment. Period.

Search: posting.php?mode=reply&f=1&t=247706


Other red flags are:
--loads
--high fees
--leverage
--AMT exposure
--closed end fund
--surrender fees
... I may be forgetting some.
d.r.a., not dr.a. | I'm a novice investor; you are forewarned.
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Dale_G
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Re: 37th Parallel Properties

Post by Dale_G »

It is always interesting when a brand new poster drags up an old thread.

Mind telling us what your day job is bcg?

Dale
Volatility is my friend
nydoc
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Re: 37th Parallel Properties

Post by nydoc »

Out of all the places, this poster decided to peddle their sales pitch on bogleheads forum. Times must be desperate.
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Zeppcoustic
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Re: 37th Parallel Properties

Post by Zeppcoustic »

I heard of this company through White Coat Investor forums. Some satisfied investors there. Any personal experiences to share from the Bogleheads?
blade7658
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Re: 37th Parallel Properties

Post by blade7658 »

I invested a small percentage of my portfolio. Returns are slighly higher than proforma. They don't communicate much though. I also invest with Origin who is beating proforma (more than 37th) and communicates regularly (including educational sessions). DLP is my likely next place to invest when I need more money in passive RE.

Totally agree this is not for novice investors, but "accredited investor" requiremnt is not a red flag in my opinion. It does mean higher risk of some kind and so you should be compensated for that risk. In these cases, you have an liquidity issue and private REIT risk. So far, I have been quite happy with these investments as diversification from my four fund portfolio. BTW, all 3 companies allow you to sell when you want, but it may take 30 days to get your stake sold.
rkhusky
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Re: 37th Parallel Properties

Post by rkhusky »

blade7658 wrote: Mon Mar 21, 2022 1:57 pm It does mean higher risk of some kind and so you should be compensated for that risk.
An investor is not guaranteed to be rewarded for taking higher risk. The investor should ensure that he has the potential for being rewarded for taking higher risk and should determine, and much as possible, the likelihood of being rewarded.
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familythriftmd
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Re: 37th Parallel Properties

Post by familythriftmd »

Zeppcoustic wrote: Fri Jan 15, 2021 1:46 pm I heard of this company through White Coat Investor forums. Some satisfied investors there. Any personal experiences to share from the Bogleheads?
Me, too!

Isn't 37P like a micro-PE type venture?
blade7658
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Re: 37th Parallel Properties

Post by blade7658 »

rkhusky wrote: Mon Mar 21, 2022 4:19 pm
blade7658 wrote: Mon Mar 21, 2022 1:57 pm It does mean higher risk of some kind and so you should be compensated for that risk.
An investor is not guaranteed to be rewarded for taking higher risk. The investor should ensure that he has the potential for being rewarded for taking higher risk and should determine, and much as possible, the likelihood of being rewarded.
Completely agree there is no gurantee. That is why I said "should". If you are taking more risk and not being compensated for it, then (IMO) you should not be taking that risk. I think your first sentence is saying the exact same thing but if I am wrong, let me know.
rkhusky
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Re: 37th Parallel Properties

Post by rkhusky »

blade7658 wrote: Mon Mar 21, 2022 5:08 pm
rkhusky wrote: Mon Mar 21, 2022 4:19 pm
blade7658 wrote: Mon Mar 21, 2022 1:57 pm It does mean higher risk of some kind and so you should be compensated for that risk.
An investor is not guaranteed to be rewarded for taking higher risk. The investor should ensure that he has the potential for being rewarded for taking higher risk and should determine, and much as possible, the likelihood of being rewarded.
Completely agree there is no gurantee. That is why I said "should". If you are taking more risk and not being compensated for it, then (IMO) you should not be taking that risk. I think your first sentence is saying the exact same thing but if I am wrong, let me know.
Perhaps it's a dialectal thing, but to me, "should" means a high likelihood. I would've probably used "may".
blade7658
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Re: 37th Parallel Properties

Post by blade7658 »

Agree it is a case of slightly different use. I mean you should not invest in something if you don’t believe there is a good chance you won’t be appropriately compensated. The should in this case applied to the investor (what they should or should not do).
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familythriftmd
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Re: 37th Parallel Properties

Post by familythriftmd »

Then in this case, why is the risk not compensated? Seems in these "micro-PE" / crowd-sourced syndications and funds they can own the real estate itself rather than the real estate companies as in REITs. What am I missing?
rkhusky
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Re: 37th Parallel Properties

Post by rkhusky »

blade7658 wrote: Tue Mar 22, 2022 8:39 am Agree it is a case of slightly different use. I mean you should not invest in something if you don’t believe there is a good chance you won’t be appropriately compensated. The should in this case applied to the investor (what they should or should not do).
Makes sense.
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Re: 37th Parallel Properties

Post by rkhusky »

familythriftmd wrote: Tue Mar 22, 2022 10:42 am Then in this case, why is the risk not compensated? Seems in these "micro-PE" / crowd-sourced syndications and funds they can own the real estate itself rather than the real estate companies as in REITs. What am I missing?
The risk might be compensated. The investor needs to use due diligence to make sure that’s true.
blade7658
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Re: 37th Parallel Properties

Post by blade7658 »

rkhusky wrote: Tue Mar 22, 2022 12:08 pm
familythriftmd wrote: Tue Mar 22, 2022 10:42 am Then in this case, why is the risk not compensated? Seems in these "micro-PE" / crowd-sourced syndications and funds they can own the real estate itself rather than the real estate companies as in REITs. What am I missing?
The risk might be compensated. The investor needs to use due diligence to make sure that’s true.
Agree totally - there is significant variability between these companies. It is a popular space now, so a lot of new companies. You definitely need to look deep before investing 6+ figures (usually the minimum for these types of deals), unless 6 figures is play money for you. In that case, congratulations!
BHvisitor
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Re: 37th Parallel Properties

Post by BHvisitor »

blade7658 wrote: Mon Mar 21, 2022 1:57 pm I invested a small percentage of my portfolio. Returns are slighly higher than proforma. They don't communicate much though. I also invest with Origin who is beating proforma (more than 37th) and communicates regularly (including educational sessions). DLP is my likely next place to invest when I need more money in passive RE.

Totally agree this is not for novice investors, but "accredited investor" requiremnt is not a red flag in my opinion. It does mean higher risk of some kind and so you should be compensated for that risk. In these cases, you have an liquidity issue and private REIT risk. So far, I have been quite happy with these investments as diversification from my four fund portfolio. BTW, all 3 companies allow you to sell when you want, but it may take 30 days to get your stake sold.
Did you have to file multiple state tax for you r tax returns?
blade7658
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Re: 37th Parallel Properties

Post by blade7658 »

No, as both properties are in Texas. Their new fund does require you to file multiple state returns.
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