b&b199 Is Tulsa Real Estate Fund a Scam or Nah? with Courtney Richardson
The Tulsa Real Estate Fund is a crowdfunding company which marketed itself as fighting gentrification by ‘buying back the block.’ Usually companies have some sort of start, with a verifiable track record before they move to gathering investors. For Tulsa, this was the first step, and they have even edited their mission so they focus not on neighborhoods but larger, more speculative (i.e. risky) areas such as marijuana and bitcoin. All of this makes the company complex, because the concept they started with is obviously important and emotionally charged it is hard to argue against. But have they fulfilled any of their promises? More importantly, will they?
In 2014, Courtney Richardson founded The Ivy Investor, the resource for women seeking to navigate the maze of the investment world in ways that make sense. Courtney is a current attorney and former stockbroker and investment advisor with fifteen years of experience in the financial services industry.
She wrote a great piece about what to look out for when investing in funds like the Tulsa Real Estate Fund. Read it here.
Courtney Richardson: Honestly from an investment perspective there’s a lot of red flags, and there’s also some yellow flags, and I think the biggest thing that sort of draws everyone in and we call it the green light is the emotional factor. It’s a very emotional.
Courtney Richardson: We have to do a lot of education to bring people of color up to where they need to be financially to make educated financial decisions as opposed to consistently being sold to. We’re sold to on such a regular basis and unfortunately the sales talk becomes our education, and then we wonder why we’re not getting the correct results or at least the desired results, because we’re mixing the sales conversation with education.
Courtney Richardson: So, in a private equity space you have a manager, you have a…management fee plus the manager also takes a cut of the profits, and that’s normally what would be a 2&20, so a 2% administrative fee and then 20% of the profit. But here in Tulsa, Tulsa is 5% administrative fee and then 50% of the profits…over double what’s the standard…it felt like a black tax.
Courtney Richardson: The commentary that was going on with the interview with Vlad is that a question was had the manager, Jay, contributed any of his money into the fund, and at the time that the interview happened is that he hadn’t, and that he intended to contribute $10k. Now, the industry standard for a manager is 5%, of what the fund can hold, and that $10k is .02% of what the fund can hold.
Courtney Richardson: The offering price of $50 per unit [of stock] is arbitrary and does not reflect the value of the interest.
Courtney Richardson: The biggest thing I’ve learned over the past 15 years is that you do not invest in what you don’t understand.