All Forum Posts by: Jey Berke

"The Sponsors pay the fees out of the equity raise."

When the sponsor sells the properties, they pay out 5% in sales commissions, but that money is taken out of the investor's equity. If the properties did not appreciate, the investors will end up with 5% less than what they started with, correct?

Thanks Leslie.

Here's the costs for the DST offered by AEI Net Lease Portfolio VI DST - Closing Costs (0.06%), Selling Commissions (5.00%), Due Diligence Expenses (0.21%), Offering and Organization Expenses (4.05%)

If the investors do not pay for these, who does and how do they get the money to pay it? Doesn't the money eventually come out of the investors' pockets, if not directly, then in a round about way?

My 72 y.o. mother just sold her only property to simplify her life. She has $1.1M in a 1031 exchange and is planning on purchasing three to four Deleware Statutory Trusts (DSTs) that contain Class A, mostly large scale residential communities in growing, economically strong regions. The DSTs expect to deliver 5% to 6% cash on cash plus appreciation. The cost to buy in is 9.5% in commissions/sales fees.

If she pulls cash out of the 1031, she’ll be taxed heavily - 28% to 30% on the first $100k, 34% on anything over that. She has around 1 week to decide what to do. 

How much cash should she pull out of the 1031 exchange? This money will be invested in Vanguard Lifestrategy Moderate Growth (a 60% stock / 40% bond fund) .

Living Expenses: $75k per year
Current Income: $50k/yr rent from real estate if her $1.1M in 1031 is invested in DSTs
$15k/yr Social Security
$30k/yr Limited Partnership (ends 2024)

Current Portfolio - $530k Cash (not including the $1.1M real estate)
We plan to invest her cash into 85% Vanguard Lifestrategy Moderate Growth Fund and 15% Vanguard California Intermediate-Term Tax-Exempt Fund

Thank you,

Jey

@Michael McLoughlin which two sponsors do you feel comfortable with. I keep hearing about Inland Group.

Anyone have experience with Delaware Statutory Trusts (DSTs)? My mom is selling a large property and wants to do a 1031 into something that is more passive in nature. Are there any companies she should gravitate towards or avoid? Any pitfalls to consider? What are the typical fees she should expect, and what return on investment should she expect after all the fees are paid off?

I'd love to hear personal stories. Thank You.