Stone Equity Group and The Investor's paradigm

[joshuahost]

My name is Joshua Host, I am the CEO of Stone Equity Group. I think its interesting that people on this site feel its fair game to bash our company with no due diligence or experience with our firm. And then when legitimate clients that have purchased properties through our company and have had success give their story you call them shills which is the same as calling them liars. I did send this link out to clients and asked them to post their story, If I would not have this site would appear every time someones does due diligence and would give a very distorted picture with no facts just assumptions and bashing.

To answer some of the points from the last post my client is not paying a management fee, it is a loan servicing fee that covers the collection of the mortgage and impounds. Additionally calling him a newby because he purchased with our company is a stretch. Consider this, he paid $23,900 for the property and the triple net cash flow is $5400 a year. That is a 22.5% return per year. I would think most folks on this site can agree that is a healthy return based on cash flow.

I am not sure what it takes to get a fair shake on this board but both of these clients are 100% legitimate and posted their experience with Stone Equity Group. This thread has turned into a cynical bashing of every point under the premise that a few people here know everything and everyone else is a newby with no experience.

I would hope in the future our executioner on this site at least reviews the facts.

[Brian06]

Dont let a few bad apples ruin the bunch.  There are some people on this forum who do have an open mind and can do their own research before making assumptions.

There are many strategies to buying and selling real estate, especially in this new era of investing.  But a few "experienced" people are set in their "right" ways of doing business and use only 1 or 2 proven formulas for proving cash flow and viability of a property. 

Creativity and open mindedness go a long way in this ever changing industry.

That said, I have emailed and requested a log in name, a couple days ago, on your Stone Equity Site so I could get more info on your type of business.

[propertymanager]

And then when legitimate clients that have purchased properties through our company and have had success give their story you call them shills which is the same as calling them liars.

We call them shills because they appear to be shilling for your company.  Not too complicated.

To answer some of the points from the last post my client is not paying a management fee, it is a loan servicing fee that covers the collection of the mortgage and impounds.

So, let me get this straight.  The guy bought a house from you and sold it to someone else on land contract and you charge him $50 per month to collect the mortgage payment for him.  Does that about sum it up?  Furthermore, I didn't say he was paying a management fee - he did. 

Additionally calling him a newby because he purchased with our company is a stretch.

I called him a newbie because he appears to be a newbie.  He certainly doesn't appear to be an experience investor.  That has nothing to do with your company.

Consider this, he paid $23,900 for the property and the triple net cash flow is $5400 a year. That is a 22.5% return per year. I would think most folks on this site can agree that is a healthy return based on cash flow.

Yes, that APPEARS to be a healthy return, but (if you have any experience in this business) you and I both know that the majority of land contract buyers never buy the property.  When they stop paying, the seller will often have months of missed mortgage payments; the seller will often have to pay the mortgage for months; the seller will have to pay the insurance; the seller may have to foreclose or evict (depending on the state and circumstances); and the seller may get the house back TRASHED!  Land contract (and lease-option) buyers are really nothing more than renters.  How will the cash flow look if those things occur (and they frequently do)?

I am not sure what it takes to get a fair shake on this board but both of these clients are 100% legitimate and posted their experience with Stone Equity Group. This thread has turned into a cynical bashing of every point under the premise that a few people here know everything and everyone else is a newby with no experience.

There is no bashing.  This is an internet forum where questions are asked and opinions are given.  If you want "a fair shake", then come here and start participating.  Answer questions and show us that you know what you're talking about and are not just here hunting newbies.

Mike 

[joshuahost]

Hey Mike,

The first email on this thread asked for a response on anyone with experience dealing with Stone Equity Group. Not one of the subsequent emails gave any information on our company or our program but rather made negative assumptions.

Then 2 actual clients with actual experiences post and they are knocked as newbies that don't know what they are talking about. That's crazy.

The first client that posted, Dino, is an accomplished commercial real estate investor with years of experience in commercial properties. Far from being a newbie, rather an experienced investor outside his typical model and he gave our company a shot at fulfillment.

Lastly in response to your point on defaulted land contracts, if the land contract buyer stops paying the mortgage they are in breach of contract at which point they forfeit any principal payments and revert to a month to month tenancy. From  that time they can be evicted. The only exception is in farm states like KS and OH where after the land contract buyer has paid 20% or more of the principal balance they have equitable rights and the investor would have to foreclose. Once the buyer is out the only carrying costs would be utilities, taxes and insurance, there would be no mortgage payment as our properties are purchased with cash or IRA (only $26,900 currently). The investor would still have the cost of rent readies which would be the same with any rental property. To this date we have not had 1 default under this program but that is a risk of real estate investing.

Please check out our better business profile and do your due diligence on our company. Real estate investing is a combat sport, with a multitude of variables and risks. We do not have a crystal ball or an ability to eliminate risk. We attack our clients issues head on by answering their calls, putting together an action plan, and executing. Once we have addressed a problem we put systems in place to mitigate the chance of that problem happening again.

I appreciate the fact that contributors with years of experience post ideas, and collaborate to this board. This communication can shorten the learning curve for other investors and increase success. I will participate in anyway possible in the future and thank you in advance for being open. - jph

[Hooch]

Joshua,

Please explain the difference between the land contracts you do and the lease options I do. From what I understand the primary difference is what you are doing is not recorded. I am trying to figure out how you have not had 1 buyer default to date when both from personal experience and friends who do the same, an overwhelming number of people default. Upwards of 75%. Personally, I have no problems when a buyer defaults because my lease options are set up to account for this.

Also, a 22.5% cash on cash return would be outstanding compared to the stock market but increases significantly for those who put LESS down.

Also please explain the term "triple net cash flow is $5400 a year". What is "triple net cash flow"? A Google search brings nothing.

There are MANY scammers out there, especially in real estate, and I think you can agree with that. Since we have opened this for discussion I think it is important to clear this up now. If you get a clean bill of health here I can assure you that you will have many people come your way.

Thanks!

[Brian06]

Triple Net just means the renter pays Taxes, Insurance and Maintenance.  So the owner would just get the cash.

[Hooch]

Ok, same as a lease purchase.

[Hooch]

Again I will ask you these questions minus the one that was answered. No response will lead everyone to believe that in fact, propertymanager is correct and these are shills.


Joshua,

Please explain the difference between the land contracts you do and the lease options I do. From what I understand the primary difference is what you are doing is not recorded. I am trying to figure out how you have not had 1 buyer default to date when both from personal experience and friends who do the same, an overwhelming number of people default. Upwards of 75%. Personally, I have no problems when a buyer defaults because my lease options are set up to account for this.

Also, a 22.5% cash on cash return would be outstanding compared to the stock market but increases significantly for those who put LESS down.

There are MANY scammers out there, especially in real estate, and I think you can agree with that. Since we have opened this for discussion I think it is important to clear this up now. If you get a clean bill of health here I can assure you that you will have many people come your way.

Thanks!

[joshuahost]

Hey Hooch,

A lease option is just that, a lease with an option to buy. This is a typical rent to own strategy.

A land contract is a contract used in a sale of real property where the seller retains title to the property until all installments have been paid. (so its not a tenant but a buyer that owns the property)

For the last 9 years we have designed profitable real estate strategies for distressed properties. We kicked the SEG REO Program off September of last year. So since that time we have not had 1 default.

I have had defaults on other lease options and land contracts but involving different programs or strategies. With this program if someone defaults they forfeit their principal payments and revert to a month to month tenancy at which point they can be evicted. The only exception to this is in farm states like OH and KS that require a foreclosure if the land contract buyer has paid down more than 20% of the principal balance.

You are correct about the silver lining of a default. In that case the process can start over and a new profit is locked in with a new land contract buyer.

Our clients have been loving the returns and the fact they do not have a bank loan on the property. This means no mortgage payment during vacancies and the cash flow is $450 - $650 on a purchase price of $26,900.

There is an amazing opportunity right now to purchase properties around the country. The difficult part is there are so many moving pieces including:

1. Sourcing product: finding good product
2. Due diligence: back taxes, liens, code violations, rehab costs, demographics
3. Transaction coordination: escrow, title, buyers, sellers
4. Rehab: estimation, material handling, locating contractors, quality control, permits, city meetings
5. Maintenance: lawn service, maintenance, code violations
6. Leasing/marketing: advertising, signage, showings, underwriting, collecting stips, signings, packaging
8. Management/loan servicing: Collections

While nobody has a magic bullet I am proud to be apart of this company. We are blessed to have a good sized group of around 75 folks that passionately believe in the vision of SEG and work to execute our systems on a daily basis to mitigate head aches and increase our clients success. If you Google Stone Equity Group you will see multiple client case studies that have purchased between 2 - 16 properties with our company.

I hope I answered your question. Thanks, - jph
 

[Nicky Foust]

I am writing as a legitimate customer of Stone Equity Group who is not happy with the services they provide.  I was intrigued by their offer and weighed the down side and went for it.  I purchased a home in Kansas City MO in March.  At this time, it has a buyer living in it who has defaulted (I did not get the payment yet this month).  The company that they want you to go through to service the loan is very expensive for their services.  I have spoken to numerous insurance companies who will not insure the home, and I can't get a call back, or a return email from anyone at SEG.  This has been a 4 month nightmare for me.    I would definitely NOT recommend this company to anyone.  I could go on and on, but really I have better things to do. I don't look at this site very often, so if anyone, including Josh, who I have seen post on here a few times, wants to get anymore information let me know

[Hooch]

Joshua Host

Do you care to comment on this. Did you guys pull one over on this woman?

[christopher w]

Based on the short bit of research I was able to find on SEG, there does not seem to be a huge amount of complaints out there.

The LA county BBB gives them an A- with only one customer complaint that has been resolved.

http://www.la.bbb.org/BusinessReport.aspx?CompanyID=100037042

Here is another link to a BBB site that has a couple of positive reviews.

http://www.trustlink.org/BusinessProfile.aspx?ID=205956991

With that being said I know these reviews could have been posted by the company themselves. I did find it interesting that there were no serious complaints out there.

To be honest the only solid complaint I was able to find was the one that was just posted by Nicky Foust. As we all know it is impossible to make everyone happy all the time so perhaps this is an isolated incident. However with that being said I am interested in hearing Mr. Host's response to Nicky's complaint.

[justin0419]

Nicky,
Is this a true complaint against the company or was it just a way for you to throw out your REI website address in a post here?  If you have your own website with information for home sellers/buyers, why were you dealing with the SEG anyway???

[christopher w]

Good eye Justin. I missed that.

[Nicky Foust]

As a final note, in trying to actually make some progress with SEG I contacted the BBB to help me address the issues, because it is not productive to just whine in these types of forums.  (which I'm obviously not very savvy at since I posted my EMAIL address so that actual interested people could contact me for details and it then got deleted by a moderator.  My sincere apologies for my faux paux justin0419, and just to answer your question, I was working with SEG because even as an active real estate investor I keep my mind, and my options open to ALL possibilities.  You might try it sometime.)  To the credit of the company in answer to my BBB complaint I did receive a call from Mr. Host who I am working with to iron out the specific issues I have had. He seems sincerely confused by the unresponsiveness of his team and is putting in the effort to  remedy the errors.  This says a lot for the company.  In retrospect, to honestly answer the original posted question.  I think that you might consider SEG as an investment option if you are the kind of person who wants to park their money in a mutual fund and pay no attention whatsoever to what it is doing or the details of the situation.  If it works out as they plan you give them $25K ish and in 10 years it turns in to $60K ish.  My plans generally include turning that kind of profit in much less than 10 years, but I guess that is because I am paying attention.  Not being an investing lemming, maybe this wasn't the best investment for me, but it has been a learning opportunity.  My final recommendation would be to think about what your goals are with your money and if turning over control of that chunk of money for the next decade, for the return they envision is a comfortable and profitable thing for you then go for it.  Happy investing!