1031 exchange - What to look for in a DST?

[Larry Krueger]

Hi, I am looking into selling my rental property and will use a 1031 exchange. One of my 3 identified properties will be a DST. Does anyone have insight into what to look for when attempting to choose between DSTs? If I'm presented with 15 options, for example, what criteria would I use to choose one over the other?

Thank You,

Larry

[Jon Taylor]

As @Dave Foster  said, 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 of it’s a net lease deal? (Population in the 5-mile, population growth, etc…)

I generally stay up to date on the current DST market, and I doubt there are 15 offerings that you'll think are attractive enough to invest your money in. A lot has changed in the last 3 months. And the 18 months before that. Some are great. Most are not… (IMO)

So, proceed with caution.