All Forum Posts by: Jon Taylor

 I'd be super curious to talk with you. Can you DM me?

@Ronald Verdugo, I'm sorry to hear that your PASCO investment didn't perform as expected. I actually reviewed the due diligence on this offering when it was released and chose not to invest.

@Daniel McNulty, I agree with you that reviewing the DST is more challenging for the typical retail investor than looking at a SFH. There are entire firms built simply to publish research every publically available DST on the market and track performance over time. Often times a DST that underperforms is exposed to unnecessary risk that is identifiable up front.

When is your targeted timeline for the sale? Days, months, or years?

@Glen Z. I'm glad my input was helpful! Thanks for the shout-out. 

 I will send you a direct message.

One cautionary reminder is that the sponsor (Inland, etc…) is the seller. Going to the sponsor directly is like asking the homeowner what’s wrong with their house. Good thing to do. But I wouldn’t skip the inspector!

Russ - The objective of this forum is purely education, but if you'd like to send me a direct message, I can provide additional information. 

@Russ Olivier,

You are asking the right question, and like any real estate deal, due diligence is massively important. The challenge you'll face is that, even though this is fundamentally real estate, you're moving from the SFH retail world to evaluating institutional assets within asset classes that are likely less familiar.

The first thing you'll notice is that the sponsors (who are the Trustees of the trust and could also be thought of as the general partner of the deal) will issue a PPM (private placement memorandum) that is a 300-500 page document. This document is everything that is necessary to issue the deal. A worthwhile investment isn’t just one with attractive cash flow projections; it must also base those projections on sound underwriting assumptions. Those assumptions are all documented within the PPM.

Information from the sponsor is important but should serve as the starting point. You'll want to collect research that goes far beyond the documents and reports provided by the sponsor.

I'd work my way down this list when looking at the buildings: 

Specific to the properties: Acquisition Costs, Environmental Reports, Appraisals, Property Condition Reports, Inspections

Because these are likely commercial properties, much of the value is connected to the tenant, so evaluating the tenant becomes crucial: Conditions of Leases (duration, escalations, extensions), Balance Sheets, Competitors, Historical Performances, Credit Scores, Macro Trends

Local market factors that you are used to pulling: population density, population growth, unit type inventory and growth (multifamily), median income, etc...

Financing terms: interest rate, principle paydown plan, cash sweep options...

Offering model: management plan, operations, asset management, exit strategy.

Sponsor track record: Every sponsor has a list of the previous offerings within the PPM. Although the past won't predict the future, it's important to understand their expertise and previous success. 

There are financial services firms that focus on real estate backed securities as a significant part of their practice. I'd try to parse out the sales people from the analysts with a simple question, "Can you show me an example of a DST that your firm is choosing not to sell, based on your evaluation of the underwriting? And can you walk me through that offering in great detail?"

The ability to exchange real property, held for investment, for real property, held for investment without triggering a taxable event. See below for some basics. I've attached a link that can help you as well.

1) The taxpayer needs to stay the same on the replacement property as the relinquished

2) You need to replace the total net value of what was sold

3) You need to spend all of the equity (net proceeds) that was generated by the sale

4) You have 45 days to ID - there are 3 different rules you may choose to use (see link below)

5) You have an additional 135 days to close on what you ID'd

6) You need to hold the funds with a QI

https://www.investopedia.com/f...