SPOOZ Inc (SPZI)

[I ll be back]

It's likely not a bust for the member who got to buy in for $150,000 in cash.

Great factual analysis as to why the real estate deal is another bust.

LLC write-offs can work well for members against their personal taxes. When you factor in the depreciation schedules against having no personal guarantees they always look attractive. However, there is an old saying.

If it looks too good to be true

....

Here's where the risk for the member comes. Under the current market (lending) conditions, these assets are dropping in value due to the cost of new money to take out the existing loan. EVEN if the appraiser came up with a NOI in the $1.5M range, the lender will only support $900,000 or what is called a Debt Service Ratio of 1.65 (DCR).

Meaning a loan at 6% / 30-year is only going to get you $12.5M. This is why the market is running scared!

Where this deal goes side ways for the investor is the write down on the debt when the property goes into foreclosure. Meaning "debt relief".