All Forum Posts by: Brandon Bruckman

Good thread and great comments by all (especially @Steve Morris).  

We need more education in this space. You have to have someone standing next to you doing due diligence. The "stock broker sales guy" won't work. DST is too complicated not to have due diligence as part of the service they are offering (plus the commission they make should warrant more help that you can rely on). Sponsor history is available in detail along with everything you could imagine to perform good due diligence on a deal.

Fees up front are an issue.   @Paul Moore and others have done a great job taking fees down in the product.  

Lower returns are an issue as well. This is more of a function of the asset purchased (class A multifamily is 60%/70% of the offerings) then the DST structure.

We see DST work for those that do not have the time or desire to continue managing property.

Hope this helps those of you that are exploring DST.

Curious, why would you skip a 1031?

@Konrad Lightner define "more passive".  

@Garrett Smith you can use syndication for a 1031 exchange, but it needs to be structured differently than most deals in the marketplace. Most deals are structured to make passive investors limited partners. That won't work for 1031 exchange. So you need a tenant in common (TIC) structure.

This is possible, but it’s harder to convince a syndicator to build a deal that way.

Another option is Delaware Statutory Trust (DST). Basically DST is large scale syndications built for 1031 exchanges.

Of course you can always buy direct and get a 3rd party manager. But it sounds like that would be time consuming trying to deal with your sale at the same time.

Zero coupon works will to facilitate a 1031 exchange to reach the needed LTV. As a stand alone investment we do not usually recommend them. We are exploring a strategy however that would provide liquidity to the investor using a zero coupon DST. Could be interesting.

@Rick Trivedi I can talk about TIC syndications. We have seen 6% preferred returns and then some sharing of the upside. IRRs in the midteens. Mainly multifamily available, but other asset types are emerging. Getting into these investments is can be tricky as most syndicators would prefer GP/LP structures. Its really a matter of how much capital you have to invest.

@Nik L. I hear you. Based on what you were making and your expectations you could get that in self storage DST land. Harder in multifamily.

Congratulations on your sale. You have a nice opportunity to diversify into passive investments. The TIC option could be interesting, but you likely would have to place all your funds with one investment. Delaware statutory trust is an option to diversify across asset types and markets (100k min investment usually).

We like self-storage as an asset class right now in specific markets.  Essential business retail is also interesting.  Great multifamily deals are getting harder to find, but solid deals are out there.   

Hope that helps a bit.  

Hi Nancy - you have to invest the proceeds, not just the gains.  Think about 1031 exchange as a swap, one property for another property. 

You could use a tenant in common structure.  It's important for your cousin to keep the same entity that he's using in the multi-family into the family farm.