Investor · Meridian, ID · Member since 2023 · 7 posts · 3 votes
I am contemplating a 1031 into a DST. I have been watching videos & reading lots of posts, but one thing I haven't seen covered is how much time, after a DST is invested in, do you spend 'managing' the DST? Meaning, do you continue doing 'due diligence' analysis after you have the DST? And, how much due diligence analysis did you do prior to investing in the DST or did you just leave the analysis to your financial advisor &/or the DST sponsor?
Pasadena, CA · Member since 2019 · 136 posts · 148 votes
3y
Regarding timeframe, each offering is different, and needs to be understood in the context of the terms of the debt and investment objectives of the Trustee on exit.
That being said, generally DSTs can be acquired with hold periods in the 3-7 year range.
Regarding due diligence, every investor should be able to understand the answers to these questions prior to investing: (*note: you can get all of this information on your own, but it will require information derived from multiple data sources outside of the sponsor provided Private Placement Memorandum)
1. What is my all-in price compared to current market comps
2. What is the business plan to increase value through controllable factors?
2.a. What is the trailing 12 month rent per unit type and occupancy rate?
2.b. What is the rent per unity type and occupancy rate in the submarket
3. What will influence the intended exit strategy for investors?
After you’ve invested, you’ll receive quarterly or annual update letters from the sponsor, and you’ll work with the investor relations team within your wealth management advisors office to navigate and understand the challenges and opportunities faced over the hold term.
It’s a lot of work, but you shouldn’t be flying blind into any investment. Interview multiple advisor to determine who is best resourced to do the work of re-underwriting the deals that are attractive.
Financial Advisor · Milwaukee, WI · Member since 2018 · 110 posts · 96 votes
3y
After you have invested, there is zero time spent managing the DST. You could spend time reading quarterly updates, but that's about it.
Investors should spend as much time as it takes to get comfortable with the investment upfront. This can be time consuming. Reviewing the PPM and associated due diligence from your financial advisor is the minimum.
Your financial advisor should be doing the heaving lifting for you to make this process as easy as possible.
Financial Advisor · Member since 2020 · 69 posts · 35 votes
3y
Hi Ann,
I specialize in assisting exchangers to find effective passive options. After discussing a client's preferences, goals and cash flow expectations, an advisor should be able to provide several offerings that meet your requirements. Please let me know if I can answer questions or assist.
Pasadena, CA · Member since 2019 · 136 posts · 148 votes
3y
Regarding timeframe, each offering is different, and needs to be understood in the context of the terms of the debt and investment objectives of the Trustee on exit.
That being said, generally DSTs can be acquired with hold periods in the 3-7 year range.
Regarding due diligence, every investor should be able to understand the answers to these questions prior to investing: (*note: you can get all of this information on your own, but it will require information derived from multiple data sources outside of the sponsor provided Private Placement Memorandum)
1. What is my all-in price compared to current market comps
2. What is the business plan to increase value through controllable factors?
2.a. What is the trailing 12 month rent per unit type and occupancy rate?
2.b. What is the rent per unity type and occupancy rate in the submarket
3. What will influence the intended exit strategy for investors?
After you’ve invested, you’ll receive quarterly or annual update letters from the sponsor, and you’ll work with the investor relations team within your wealth management advisors office to navigate and understand the challenges and opportunities faced over the hold term.
It’s a lot of work, but you shouldn’t be flying blind into any investment. Interview multiple advisor to determine who is best resourced to do the work of re-underwriting the deals that are attractive.
Financial Advisor · Boynton Beach, FL · Member since 2019 · 127 posts · 80 votes
3y
For reference, we have a DST 1031 fund on our platform (I'm in the private wealth business as an analyst) that has a minimum hold period of 2.5 years before the funds are diversified fully into the main fund, where there is daily liquidity (though you'd get capital gains recapture if you were to sell, similar to any other 1031 fund offering).
Vet the operator of the DST 1031, look at their investment thesis and make sure that aligns with your investment philosophy. Ask about their underwriting process, their leverage ratio, liquidity position, what are they doing with cap rate assumptions in this environment and how they are marking both their properties as well as their debts to market (if at all). Many other questions, but you want to be thorough in your vetting process.
Investor · Denver, CO · Member since 2023 · 161 posts · 52 votes
3y
Hey Ann,
I work at a firm that specializes in underwriting DSTs and helping clients exchange into them. Happy to provide some information for clarity. Feel free to reach out over a private message.