All Forum Posts by: Joe Sera

@Robert Casper the costs/fees vary depending on the individual offering.  

Some are as low as 1.00% and it's also not uncommon for the total costs to be well above 11% in others. Keep in mind, there are additional costs beyond just commissions/BD fees to be aware of.

I'd be happy to walk through a PPM with you and get into more granular details.

@Kay March I agree with you there and a big reason why the 721 DSTs (also known as UpREIT DSTs) have gained so much popularity and DST market share.

The total upfront costs to get into these 721 DSTs are less than 5% (assuming you're not working through a broker) and you don't have to pay 10-18% (or more) to exchange into a new DST every time your investment goes full-cycle.

@Nick C. I'd give it a high probability that when the Capital Square DSTs you purchased go full-cycle you'll have the opportunity to go into their REIT via the 721 Exchange. This would provide actual diversification and liquidity. They recently did their first 721 and I think about 85% of investors opted to go into the REIT.

@Nikola Kiridzic I would agree with @Michael Gansberg.

It sounds like your father fits the DST investor profile.

@Diane Forgy if diversification and liquidity are important to you, then I highly recommend looking into 721 DSTs (also known as UPREIT DSTs) instead of "traditional DSTs."

@Sandi Bates A lot of investors are hesitant to invest in NNN properties these days given the current and expected inflationary environment we're in combined with leases that have fixed rent escalations. If inflation outpaces the rental escalations the NNN DSTs will not hold their value and you'll more than likely end up getting absorbed into their UPREIT.

I'd recommend looking at DSTs in more inflationary adjusted asset classes like multifamily, self-storage and manufactured housing. 

@Nick C. Keep in mind that most DSTs are about 50-55% LTV or less.

The answer to your question is somewhat subjective depending on personal preferences...The most important thing to keep in mind is that you'll need to match your debt and equity in order to execute a tax-free exchange.  You can always take on more debt, but less will create taxable "boot."

@James Sun We're RIAs and that's exactly how we work.

@Rw Pastore

Both NNN properties and DSTs are passive investment vehicles that are appealing to people looking to retire and that no longer want to actively manage property. Both have their pros and cons. Both appeal to different investor profiles.

Often times NNNs are more attractive to higher net worth investors. There's a lot of competition for NNNs in the $1-2mm range and many of these deals tend to be lower quality properties, eg. Dollar General in a tertiary location.  The people that are buying NNNs intelligently and as a retirement vehicle are typically buying them all cash or with very little debt.  They focus on the higher quality tenants & properties, which start at about the $3mm range.

Also if you're planning to 1031 exchange and buy a NNN, you should start looking for your replacement well before closing on your relinquished property. Especially if you have debt you need to replace and will need to get financing.

In regard to DSTs, there must have been some confusion from the brokers you talked with...DSTs are designed for investors that are looking to retire and 1031 exchange into something completely passive. The investor profile is typically someone that's looking for capital preservation, while looking to make a conservative ROR along with some capital appreciation. Most DSTs are all cash or 40-55% LTV.

It's important to go with high quality DST sponsors that have a track record of success. There's about 90 DST sponsors, but 15 of them account for 99% of all DST assets raised.

Right now we like inflation resistant asset classes-- multifamily, self-storage and MHCs.

Who here has invested in a DST?

What are 1-2 things you liked?

What are 1-2 things you disliked?