All Forum Posts by: Leslie Pappas

Hi Lauren, if you’re an accredited investor who is seeking to diversify your real estate portfolio into higher quality investment grade real estate, but don’t have the experience of managing or acquiring larger institutional quality real estate you might consider learning about DSTs (Delaware Statutory Trusts). They are hands-off, institutional grade real estate investments (apartments, self storage, commercial, medical office, etc), and allow investors the option to diversify into multiple markets around the country. They can 1031 into $50-125M projects with as little as $100,000. Professionals with decades of experience and proven track records do all the heavy lifting. Loans are non-recourse.

Can read more on my blogs here on BP,

https://www.biggerpockets.com/member-blogs/7993-cashingin-tax-free-1031-exchange-and-dsts

If you're an accredited investor, we have had many investors making straight cash investments into funds, which are small portfolios of properties. This might be something for you to look further into based on the goals you’ve shared.

Average DST loan-to-value ratios range between 45% and 60%. Loans are non-recourse, meaning the investor neither has to qualify for the loan nor take responsibility for the loan.

DST investors benefit from the loan. The debt amounts increase their investment values. The loans meet the 1031 exchange debt reduction principle requirements. And investors receive 1098s, which can be used to apply their portions of the loan interest payments to their tax write-offs each year.

Welcome Allen, sounds like you are taking all the right steps. This site is great for networking and getting a ton of real estate information. Best of luck!

States like Texas and Florida are much more landlord friendly than California. Many of the investors I work with take their money out of the California and move it to a different state/market. There is still good money to be made in AZ, FL, GA, TX and other states, however, picking the right submarkets is key. 

Specializing in real estate for many years I can tell you what people I've been in contact with have done to set themselves up for retirement. There are two types of investors:

1. Buy or inherit and hold for a long time, then cash out and redeploy equity into potentially higher cash flowing properties or other investments.

2. Buy or inherit and hold all their lives while working the properties for income.

I've seen teachers, firemen, software engineers and all sorts of people utilize both strategies successfully. One way or another, however, the investors must work to pay down loans, increase rents and decrease expenses wherever possible. One way or another, they are building their net worth.

Building net worth is how you may possibly retire with fewer worries. If your retirement utterly depends on having adequate cash flow from your properties, any downturns will cripple you. AND you must maintain adequate reserves to take care of the disasters that may happen.

So my advice- build your equity.

Yes it's vitally important to know who you are working with, and have the history of the players involved. I see former players from the 2000's coming back to the industry under different business names, and some of their prior work was less than stellar. It's important to have the advice and perspective of an industry old-timer, in my opinion.

I can tell you what people here in the Bay Area have done to set themselves up for retirement. There are two types of investors here:

1. Buy or inherit and hold for a long time, then cash out and redeploy equity into potentially higher cash flowing properties or other investments.

2. Buy or inherit and hold all their lives while working the properties for income.

I've seen teachers, firemen, software engineers and all sorts of people utilize both strategies successfully. One way or another, however, the investors must work to pay down loans, increase rents and decrease expenses wherever possible. One way or another, they are building their net worth.

Building net worth is how you may possibly retire with fewer worries. If your retirement utterly depends on having adequate cash flow from your properties, any downturns will cripple you. AND you must maintain adequate reserves to take care of the disasters that may happen.

Most of my clients fall into the first group above. If they are/become accredited investors, they buy into institutional grade $50-125M projects with as little as $100,000 and diversify. 

So my advice- build your equity.

Some investors just want the tax benefits, passive income, and appreciation without the hassles. Syndicated real estate is a great way to enjoy these benefits.

Crowdfunding is great if you are an expert at evaluating offerings on your own. Crowdfunding makes real estate easily accessible, however, in regard to institutional/syndicated real estate investments, the advice of an expert who works in the industry every day, knows all the players and their track records, and performs due diligence on each offering is a great benefit to you and comes to you at no cost. You might consider using an investment advisor to evaluate which offerings are suitable and promising. Best of luck!