All Forum Posts by: Brandon Bruckman

Thanks!  You would be surprised (or not!).

Depends on what you are looking for. 721 will get you to a REIT-like structure. However, you can not exit without experiencing a tax liability. We refer to this option as the ultimate end game. Use the 721, then once you pass your heirs can utilize the step-up in basis.

You're doing well! There are about 40 DST operators and most are smaller (however, in most cases, with significant real estate experience). If you eliminate the broker-dealer sales commission, you can get down to single digit upfront fee load percentage.

On your concerns, yes most DSTs have been purchased recently. To make sure you are dealing with a reputable operator you can ask for anything. Their track record, reports and statements to confirm they own the property and any third party reports related to the DST or to the operator. The best operators have third-parties produce reports on their firm.

Hope this helps. 

Purchasing DSTs through a registered investment adviser lowers the upfront cost, but doesn't eliminate it. Sponsors of DSTs will still take an acquisition fee and investors pay for the legal structure to form the DST. These costs will always be additive compared with purchasing property yourself.

As an investor, you are paying to be passive and for the ability to exchange into these vehicles.  Naturally, sponsors don't work for free!!

@Rebecca Six I'm curious, how much of your initial capital went into the ground with turnkey single family homes you purchased? Also, what are the on-going management fees?

I see. Without all the information, seems like you would be hard pressed to produce the same cash/economics with a zero DST and another home without a mortgage. However, if you are intent on selling, what you are proposing would work for your exchange.

Zero coupon DSTs typically have higher up front fees than cash flowing DSTs.  This is a large drawback of the structure.  For our clients, we will use a small amount of zero coupon DSTs to replace debt in an exchange, but other than that we usually stay away.  

You wouldn't need to buy five DSTs. You could invest the full amount in one Zero DST.

Reading through your example, you would have to look at the economics of acquiring a mortgage for replacement vs the cash / zero DST option.

Hope that helps a bit.  

You could certainly use the DST as a backup plan. Say you find two properties you like, you could identify those along with a DST by 45 days. That would give you some time to negotiate on the properties before the 180 days is up.

The company that organizes the DST (Sponsor) has full discretion as to how long the investment is held. Hold time can range from as short as three years to about 10 years. Average hold time on programs from larger sponsors has averaged about 8 years.

Hope that helps. 

These firms all appear to be broker dealers. Broker dealers will typically charge you more to invest in the same DST as a Registered Investment Adviser will. (full disclosure, I am an investment adviser. But call these shops, ask them what they charge).

I'd also ask these firms to describe the relationships in your question.  The answer should be satisfactory to you or you should walk away.  

Hope this helps!