RAD Diversified REIT, Inc. has come under scrutiny, raising significant concerns for investors and financial experts. This RAD Diversified REIT update explores the details of the company’s investment strategies, marketing practices, and the mounting investor complaints. We also explore the legal options available to affected investors and provide necessary information for those impacted by similar situations.
RAD Diversified REIT, Inc. Updates and Overview
Real Estate Investment Strategy
RAD Diversified REIT, Inc., a Maryland real estate investment trust (REIT), positions itself as an active player in the real estate sector. The company’s investment strategy centers on acquiring, repositioning, and managing a diverse portfolio of properties across the United States. This includes investing in residential properties such as single-family homes and multi-family residences, as well as investing in commercial properties like mixed-use residential-commercial spaces and farms.
This approach aims to capitalize on various market opportunities while balancing potential investment risks, and provide investors with exposure to different real estate sectors. For example, the company might purchase a distressed apartment complex in an emerging urban area, renovate it to enhance its value, and then attempt to generate income through increased rental rates. However, RAD Diversified REIT is now under heavy scrutiny, as their practices have been shown to be potentially harmful to many of their clients.
Recent Developments and Marketing Practices: Credit Cards, Home Equity, and Instagram
RAD Diversified REIT has attracted negative attention due to its unconventional marketing and investment practices, which have raised concerns in the financial community. The company has reportedly utilized social media platforms, particularly Instagram, to promote its investment opportunities. These advertisements often emphasize the potential for high returns and portfolio diversification, appealing to a wide audience of potential investors, which some critics have labeled as aggressive sales tactics.
One major RAD Diversified REIT update is that it has deviated from traditional investment norms by allowing investors to purchase the investment using credit cards. This immediately raises alarms for potentially encouraging risky financial behavior. To understand the implications, it is crucial to recognize that purchasing investments with a credit card can lead to high-interest debt if not paid off promptly. This means that even if the investment doesn’t yield immediate returns, the investor is still responsible for the credit card interest, which can accumulate rapidly.
It’s no surprise that using borrowed money for investments can amplify investment losses if the investment underperforms. This brings us to another recent discovery learned by Courtney Werning, a partner at Meyer Wilson, through discussions with investors. RAD Diversified REIT’s marketing strategy included aggressive, salesman-like tactics, such as encouraging potential investors to take out equity lines of credit on their homes to finance investments. This high-pressure approach has raised concerns about whether such recommendations were suitable or in the best interests of investors.
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$350 Million for Our Clients Nationwide.
Investor Complaints and Financial Misconduct
Stock Buyback Program Under SEC Scrutiny and Direct Sales Limitations
RAD Diversified REIT primarily sold its products directly to investors, often bypassing financial advisors and brokerage firms. Unfortunately, this can potentially impact the investors’ ability to recover their investment losses through the legal process. Meyer Wilson is actively investigating these cases to find avenues for legal recourse and are committed to helping clients wherever possible.
RAD Diversified REIT also offered a stock buyback program, which initially promised investors the ability to sell their shares back to the company. However, the Securities and Exchange Commission (SEC) flagged this program, noting the company lacked sufficient funds to support the buybacks. In response, RAD claimed they did not expect many investors to utilize the buyback option, further fueling doubts about their financial practices.
Complaints About Timely Payments
Another pressing RAD Diversified REIT update is the growing number of investor complaints regarding timely payments. These timely payments complaints against RAD have been documented extensively. According to Better Business Bureau (BBB), RAD Diversified REIT, Inc. has received repeated complaints about failing to make timely payments on investments and hard money loans. These missed payments have significantly eroded investor confidence and raised serious questions about the company’s financial management and liquidity.
Allegations of Unsuitable Recommendations
The allegations against RAD Diversified REIT includes claims of unsuitable recommendations for REITs. Suitable recommendations for investments should align with an investor’s financial goals, risk tolerance, and overall investment profile. Financial advisors are expected to assess an investor’s individual situation before making investment suggestions.
For instance, advisors should consider factors such as the investor’s:
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Age
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Income
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Investment experience
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Financial needs
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Liquidity needs
If an advisor recommends a high-risk, illiquid investment like a non-traded REIT to someone who needs stable, short-term returns or has limited financial resources, this could be deemed unsuitable and expose the investor to significant investment risks. This mismatch between the investment’s characteristics and the investor’s needs can lead to substantial financial losses and distress. Learn more about non-traded REITs and suitability in our video below:
Legal Options for RAD Diversified REIT Investors
Navigating the intricate field of REIT disputes and potential legal action can be challenging for individual investors. This is where securities fraud attorneys play a significant role. These experienced lawyers possess in-depth knowledge of securities laws, FINRA regulations, and the intricacies of investment fraud cases. They can provide invaluable assistance in evaluating the strength of a case, gathering necessary evidence, and representing investors throughout the arbitration or legal process.
If you have concerns about your investment with RAD Diversified REIT, Inc., Meyer Wilson is available for a consultation to discuss your specific case. While the cases we have seen have limited options available due to the nature of a direct sale, each case is different, and we offer free consultations. Contact us today to learn how we can assist you.
Conclusion
The situation with RAD Diversified REIT highlights the significant risks that investors may face when dealing with certain real estate investment trusts, particularly those with unconventional marketing strategies and practices. For those affected by these issues, understanding the available legal options and seeking expert assistance is vital to recovering investment losses and safeguarding financial interests. This case emphasizes the need for increased regulatory oversight in the REIT sector.
Our lawyers are nationwide leaders in investment fraud cases.
Frequently Asked Questions
What is a real estate investment trust?
A real estate investment trust is a type of REIT incorporated under Maryland state law, known for its favorable legal framework. Maryland offers flexibility in REIT structuring and governance, which can reduce shareholder influence in decisions. This makes it a popular choice for REIT incorporation.
How does a real estate investment trust work?
REITs pool capital from investors to purchase and manage income-producing properties, generating revenue mainly through rental income. They must distribute at least 90% of taxable income as dividends, allowing investors exposure to real estate without direct ownership. This structure provides access to large-scale real estate investments.
How are REIT dividends taxed?
REIT dividends are taxed as ordinary income, capital gains, or return of capital, each with different implications. Ordinary income is taxed at regular rates, capital gains at lower rates, and return of capital reduces cost basis. Consult a tax professional to understand specific tax impacts on your REIT investments.
Recovering Losses Caused by Investment Misconduct.
