All Forum Posts by: Mason Liu

As an FA myself, I agree that the typical FA compensation structure does not align well with people who want to diversify their portfolio with Real Estate holdings. I would recommend talking to FAs who 1) personally invest in R/E, 2) have experience working with R/E investors and 3) are able to help create a financial plan that reflects how R/E can be a contributory/complimentary asset to one's personal financial picture. I'd also add that often times an FA's value that they bring is their connections they have, so that could be CPAs/Attorneys/other professionals that may be well versed in the R/E space as well that they could provide to you.

Happy to talk in greater detail if you'd like!

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.

Happy to talk more in detail if you want!

As some others have mentioned, there are plenty of DST 1031 funds you can invest the proceeds to to continue to defer taxes without the added management, however then the question becomes does the benefits of passivity and tax efficiencies outweigh the cons of being able to potentially make more by being active in the business. I've seen many of these funds offer in the range of 4-7% return (not including tax-deferral benefits). It is not uncommon for successful operators to achieve a return that can outpace this, so it really depends on what you want to do.

I don't believe an eviction process from start to finish in Chicago should take anything close to a year, plus you had to go through cash for keys just to get them out...sounds like you need a new property manager for sure.

In regards to what is the next step (sell or rent), evaluate what the return will be once you rent it out at close to market rents once repaired and stabilized. Calculate your COC return, add in some educated assumptions such as what you expect appreciation and rent growth to look like over the long run, and then see whether it is worth keeping.

You shouldn't sell an investment just because it has performed bad in the past, you should sell an investment if you believe it will perform bad in the future relative to other investments you may be able to partake in.

In Palm Beach County (large area take with grain of salt), while days on market has increased substantially since the start of the rate hikes, prices have rebounded from the lows in the beginning of the year pretty strong and we are close to seeing ATH in many submarkets within the county again. Anecdotally, it looks like properties that are sitting are the ones that are overpriced for what they are (properties that typically would have gotten a buyer in quick order during COVID), but a good property will get snatched up pretty quickly here still. I personally find it quite crazy especially with cost of financing this high now, as well as insurance costs rising exponentially.

Only time will tell what happens in the next couple of years

What do you mean by "looking to pick up some hedge funds"?

Do you mean you're looking to buy properties that are owned by hedge funds?

One other option is investing the proceeds into a DST 1031 fund, so basically doing 1031 exchange of the proceeds into a REIT that allows for 1031 monies. This is a easier way to defer tax gains for a while if you can't find another direct property to 1031 into and do not want to put it into a QOZ fund. Since you do need the money, you can choose to invest only a portion of the money to minimize your 2023 tax liability.

However, one thing I think you may want to clarify is the point on bonus depreciation + cost segregation studies and STRs. I'm not a qualified tax advisor, but I have an inkling there is a way to offset capital gains if you have REPS status or own and actively participate in managing a STR. I may be completely wrong on this though, a qualified tax advisor experience in real estate would know this.

As others mentioned, listing it on the MLS will typically get top dollar, and statistically speaking having an agent list it on your behalf gets top top dollar (although YMMV depending on the agent of course).

If furnished well, would definitely recommend providing the option of selling it furnished as a STR to appeal to the STR buyers.

Without knowing your budget, it's a tough market here. Margins are pretty slim with small multifamily across most of SFL, unless you buy a good deal off-market. There's a good amount of small multis in Lake Worth. Good luck!