1031 exchange alternatives

[Sunil Kapoor]

Hi All,

I’m about to sell 2 properties in SoCal that have high appreciation and I am wavering between several 1031 options.

I'm wavering between just purchasing more properties, a DST or a Opportunity Zone Fund.

For those who have used a DST or Opportunity Zone Fund, can you give me your experience and expectations on ROI?

Thanks!

Ps, big shout out to @Dave Foster for his 1031 support!

[Jake S Mckinney]

@Sunil Kapoor

I sold a property last year that had a lot of appreciation. I put the money into DSTs. I used a broker. Basically a private quite fund shop that vets deals and then sells them to investors. I found them through personal referrals, met with them in person, did my own due diligence on the deals. I then invested in 3 different DSTs:

1. Class A apartment building. (5.2% CoC)

2. Large industrial space with a multinational corporation as a tenant (6% CoC)

3. Royalty acres in the Marcellus Shale and Permian Basin (9% CoC)

Being able to buy minerals with a DST is relatively new and the returns are great. Obviously, more risk but I'm fine with it. Overall my portfolio of DSTs averages out to about 7.5% CoC. We'll see what the IRR is when they flip these deals. I know people that are averaging about 18% IRR on their DSTs. But that was over the last 5 years so I don't expect that to continue forever. Still, tough to beat for zero work.