Investors Put Millions Into a Luxury Student Dorm. They Say They Were Ripped Off.

Lawyers, retirees and others who invested their savings in a luxury student dorm say two real estate firms duped them. They’re suing to recoup their money.

Adelaida Martinez was attracted by the opportunity to invest in Skyloft Austin, an upscale student housing complex near her alma mater, the University of Texas at Austin, and collect a monthly dividend check. James Parziale put money into the same deal because he was impressed by the shiny new high-rise with its sun-drenched rooftop pool and door-to-door garbage collection service. Now Ms. Martinez and Mr. Parziale are among dozens of small investors who are suing, saying they were taken for a ride by a group of professional real estate investors who raised tens of millions of dollars from people like them to finance the purchase of the student dorm. According to the lawsuits and investors, more than 200 lawyers, accountants, doctors, retirees and others each invested $100,000 to $500,000 in the deal in 2019. At least half of them are now suing the property management firm that promoted the deal, as well as a hedge fund that provided additional financing and later took control of the building before selling it off. The investors are seeking to recoup much of the $75 million they put in.