Anyone Hear of Passco & DSTs?

Question

We're selling the investment properties that we currently manage and considering investing in Passco's Delaware Statutory Trust (DST) offerings in Arizona (Ocotillo), Florida (Marisol) and Georgia (2 Blocks) via a 1031 exchange. We have visited the properties (200+ residential apartments at each location) ourselves and they are doing well. Has anyone in this forum invested in DSTs or worked with Passco in the past?

Ronald Verdugo · Answer

We are 1031 DST investors with Passco on "The Shelby" property in Alexandra, Virginia. We attended their presetation at their office prior to making our investment and were very impressed. That positive impression has ended quickly. This investmdent has produced <5% distributions over the past 2 1/2 years with a 2% reurn for the past 3 months and projected in the foreseeable future. Passco by their As investors in Passco's "The Shelby" DST we are VERY unhappy with the return on the investment and the excuses for this performance. From a fire at a nearby property and resulting damaage to The Shelby", to delays in fire damage repairs due to Covid 19 restrictions, to renters not paying rent due to Covid 19, to an approx. 20% vacancy rate, to insufficient reserve funds, to an obvious lack business loss insurance - Passco continues to underperformance on every statement they made at their seminar - from the safety of the investment based on their previous track record, to the expected annual distrubution amounts paid out. The return on this investment has gone from approx. <5% annually, to now 2% for the foreseeable future. Passco has admitted that the property has under performed since it was aquired and have even stated that it has underperformed industry standards in their lastest news email. The fact that Passco have pumped over $1.5m of their own funds into since that date and is ci=onsidering "its options" is even more disturbing, as this appears to be be an investment ready to into bankrupty soon. We feel that the statements made by Passco were false at best and our trust in them has gone from being enthusiastic investors, to one that wishes the property would be sold and our investmet funds returned before this property goes into bankruptcy. Does anyone else feel the same or have you had a similar experience?

Saundra De Montano · Answer

Yes, I attended Leslie's tour both last year and this year. Thanks for your feedback.

Buddy Holmes · Answer

I have not visited the 1000 W site, but the location is not the best in terms of traffic to downtown.

I was surprise at where is was compared to what the brochure words indicated.

I have invested in the Student housing offerings of Nelson Brothers.

Have you been on one of Leslie's tours?

Saundra De Montano · Answer

Marisol was AMAZING!! I'm sure you will like it. Make sure you put in a reservation as I believe their offering might close soon (1-3 months?). Yes, last year we were introduced to DSTs via Leslie Pappas as well and have also read her book (Cashing In Tax Free: Your Ultimate Guide to a Tax Free Retirement Using 1031 Exchange and Delaware Statutory Trusts). Once, we got over our control issue, it was a no brainer to trade up, so to speak.

FYI, you might also be interested in Passco's 1000 W offering there in your own state. We visited them last month and are considering investing there as well.

Leslie Pappas · Answer

Hi Saundra and Buddy- I am very active on this site, and while just about everything having to do with investment real estate is covered, DSTs are not too often discussed, likely as they're for accredited investors only.  Please let me know if there is anything I can do to further your education and research.

Buddy Holmes · Answer

I have attended a couple of PASSCO webinars and have visited there office in Irvine with @Leslie Pappas.  I have read @Leslie Pappas Book on DST's.  I have invested in some DST's using my Self Directed IRAs.  I do plan to visit Marisol at toward the end of next month.

I plan to work a 1031 Exchange into DST's in the near future once I have a firm closing date on a property sale currently in due diligence.  I would very much like to continee discussion on the 1031 property to DST process.