r/Syndications

I just received an email from Grocapitus stating that my $100k investment in a Texas property was foreclosed, resulting in a 100% total loss for both limited partners and preferred equity investors.

This firm is headed by Neal Bawa, the self-proclaimed "Mad Data Scientist" of the multifamily universe. Far from being a data wizard, he has proven to be entirely incompetent.

He overpromised returns while boasting about being "conservative" with his pro formas, claiming that "with his secret sauce, actual returns are usually much higher." He assured us that, in the event of an economic downturn, he would build a war chest to protect the asset. Apparently, he failed to do so.

Neal Bawa acts like a snake oil salesman who profits from commissions while delivering catastrophic results. He has wiped out capital for limited partners and preferred equity investors alike.

Now, he is hosting webinars to pitch new water investments and CPA firm acquisitions. Don't fall for it. He cost me and countless other investors 100% of our money after stringing us along for three years.

I think I'm done with my current CPA. I had two final K-1's this year -- both total losses. One resulted in a large net 1231 gain that flows right onto Schedule D. He couldn't explain why, but it is taxed as a long-term capital gain - on an investment that was a total financial loss.

So I started digging into this. Tax is not my speciality, so I always have to refresh my memory on how these work.

There were 3 years of prior net losses. The previous year shows a large deductible loss on Form 6198 At-Risk Limitations. But for some reason it's not there on the Form 8582 Passive Activity Loss Limitations. So was it allowed or not? If it was at-risk, it should be disallowed due to passive activity loss limitations and suspended, right? On Schedule E it shows "At-Risk" is checked but there are all zeros for the amounts.

I'm sure the answer is there, but that I have to prompt him to go through the prior year returns is frustrating. The forms that he generates using his software are missing information that is needed to account for the suspended losses. Every year is a struggle: waiting for sponsors who are always late delivering K-1's, trying to find errors and omissions on the return, filing amended returns. Not understanding if the output is correct.

Are there better options?

I have a large number of K-1's that generate multiple state returns so it's a big job and it costs a lot to prepare my returns. It already hurts to pay the fee I'm paying, as I'm losing money on nearly all of these, so I wonder if a firm that specializes in LP tax returns is going to be even more expensive. But I never have a good feeling about the return that I get.

Small disclosure up front: I produce independent films, and I'm currently financing one, so I have a foot in this world. Not linking to anything or pitching anything here — I just spend all day in this stuff and see it explained wrong constantly, so figured I'd write up the honest version.

Something I find genuinely interesting about the alternatives landscape: nearly every major alternative asset class eventually got institutionalized. Real estate has REITs and funds. Private credit built a whole apparatus fast. Litigation finance, farmland, music royalties — all have wrappers now. Film, despite being a slice of a ~$3.5 trillion global entertainment market, basically doesn't. Why?

A few structural reasons. The asset has no operating history and never will — every film is a bespoke one-off evaluated before it exists, so standard underwriting frameworks don't map onto it. The counterparty structure is adversarial by design: the distributor sits between the asset and the revenue, takes fees off the top, and controls the reporting. 'Hollywood accounting' is a real phenomenon, not a myth, and if institutions can't verify results they can't underwrite the manager. And there's no exit other than the asset's own cash flow — no secondaries, no continuation vehicles.

So film ends up with a return profile that resembles venture — concentrated in a few winners — but without any of the machinery venture built to live with that dispersion. No published base rates, no standardized reporting, no priority-return waterfalls as a norm.

My honest take, from inside it: film isn't un-institutionalizable, it's just un-institutionalized. The opacity is a preference held by parties who benefit from it, not a law of nature. The pieces that would change it — standardized reporting, investor-first structures as default, honest published outcome data — are all doable. Curious whether anyone here sees a path to that, or whether the incentives are too entrenched? PM me for any specific strategies and opportunities