Questions to ask when vetting DSTs

[Rob King]

BLUF: I am selling three condos in Honolulu, two rentals and one primary residence.  I will list the three properties and hopefully sell in July of this year as I am relocating to Baltimore, Maryland.  I think a 1031 would be the best for the funds generated from the sale of two and have been looking into DSTs.

If I assume, based on my seller's estimates a profit of approximately $250-280k for the sale of the two properties with a combined sale price of $760-800k. 

As I educate myself on DSTs I would appreciate the BP community's insights into successful due diligence practices when vetting DST opportunities.

Please forgive the broadness of the question but at this junction I'd rather cast a wide net.  Thanks in advance.

[Russell Brazil]

If you are moving to Baltimore, make sure to reach out to @Sara Frank

[Sara Frank]

Quote from @Russell Brazil:

If you are moving to Baltimore, make sure to reach out to @Sara Frank

 He's ten steps ahead of you, Russell! Lol 

[Jon Taylor]

In regards to evaluating DSTs, each asset class needs to be evaluated with an understanding of the technical fundamentals that matter, AS IF you were purchasing those properties outright.

Questions like:

Were the properties purchased at the right price?

Are the properties being marked up before they are sold to investors.

How is the cash-on-cash being modeled?

What are the assumptions that are being factored in - namely occupancy rate and rent per square foot per unit type - and how do they compare to the local market?

What are the terms of the debt?

What are the demographics of the area? (Population in the 5-mile, population growth, etc…)

What's the exit strategy?

I generally stay up to date on the current DST market, and there are a few that are currently attractive enough to invest money in. A lot has changed since the fed started to raise rates. And a lot changed since the COVID crisis. Some are great. Most are not… (IMO)

So, proceed with caution.

[Brandon Bruckman]

What Jon Taylor said plus you need to evaluate the financial broker or RIA your working with plus the sponsor of the DST deal. The experience and track record of both of these parties is as important as evaluating the actual deal.

[Carlos Ptriawan]

There is 1031 broker out there that can give you as a potential client an actual full cycle of the most DST player track record, really awesome, and an eye opener. I use it to select the DST that has a good track record. I can't give the name but just ask every broker they will give it to you.

[Neesa Patel]

Quote from @Carlos Ptriawan:

There is 1031 broker out there that can give you as a potential client an actual full cycle of the most DST player track record, really awesome, and an eye opener. I use it to select the DST that has a good track record. I can't give the name but just ask every broker they will give it to you.

 CArlos can you give an update to which name this is? 

[Carlos Ptriawan]

Quote from @Neesa Patel:

Quote from @Carlos Ptriawan:

There is 1031 broker out there that can give you as a potential client an actual full cycle of the most DST player track record, really awesome, and an eye opener. I use it to select the DST that has a good track record. I can't give the name but just ask every broker they will give it to you.

 CArlos can you give an update to which name this is? 

 I dont want to promo someone but it's one of the big 1031 broker that has large presence, ask if they have track record for all sponsors, that's the key question to ask