All Forum Posts by: Norman Schultz

I've worked with Leslie for a couple of years now on two properties 1031 exchanged into DSTs. Leslie and her team are very professional and overall solid to work with. But something must have happened in the market to change the returns DSTs are producing. For me on average they are only slightly outperforming inflation, mostly because one of them just announced a dividend reduction. It would seem the days of the 7%+ returns cited in the past are over. And I'm not entirely sure why - I still invest in real estate and my other properties are performing quite well, and REITs have been outperforming the stock market over the last few years. And perhaps the biggest annoyance is that you don't actually know when your funds will become liquid. That said, these DSTs did save us from paying a very high capital gains tax rate, and I'm hoping there will be some capital appreciation before we cash out, so there's still a decent chance they will prove to be good investments. But sometimes I think we should have just taken the damn capital gains hit and just smartly invested whatever was left without looking back. 🤷‍♂️

I've had two DSTs for a couple of years now, but recently one of them just announced a dividend reduction. Hopefully it's temporary but the return rate is now below 2%. And the investment is tied up for an unknown number of years - estimated to be about five more years but no one actually knows! Apparently a company running a DST does not need to actually have a firm end date. So at this point my general attitude about DSTs is... meh. Sure it's saved me from paying hefty capital gains tax wow I was working, but between my two investments I'm now barely keeping up with inflation. Between that and the unknown amount of time the investment is ill-liquid, I'm not sure if it wouldn't have been better to just pay the tax and take the money.

@Chris Seveney Thanks again for the thought replies. I've got a very basic, possibly philosophical (lol) question.

Owning stock market or ETF shares means you own a portion of the company or fund. That portion can change (shrink or grow) based on share dilution or splitting. Someone may ask "So, how do I know my shares won't become worthless through dilution, stock splits, or bad actors?" - and the answer is something like "Well, you don't know that for 100% certain, that's one of the risks, but publicly traded stocks are subject to all kinds of regulations and the scrutiny of public sentiment. A company would be punished by the feds and/or the market bc of perception. These, for the most part, prevent wild "bad faith" moves.

Other investments I have like DSTs and crowdfunding involve actually owning a fraction of a physical building or complex. This, of course, involves market risks and the value of the property, but I don't have to worry about the company manipulating my equity - whatever that property is worth times my fractional ownership number is simple math of what I own.

Investing in 7e means holding private shares. These, if I understand it correctly, don't represent fractional ownership of loans as assests. They're just shares in the fund, made up like other shares are. In that these aren't on the stock market, what prevents the shares in your funds from being diluted or split down to being worthless, or being raided and rendered valueless? I don't have reason to think this will actually happen with 7e, just trying to understand the basic risks involved in these kinds of private investments.

@Chris Seveney - I found out that the SEC is warning people about promissory note investing fraud (https://www.sec.gov/investor/p...). Could you answer a few questions about your company?

1. Are the investments you offer registered with the SEC or Virginia Division of Securities and Retail Franchising?

2. Are you or someone else at 7E licensed to sell securities?

3. Any data on the default rate for the notes you invest in?

Thank you and advance.

Mr. Santarelli - I'm interested in getting started in promissory note investing. I'm in the general due diligence phase, i.e. determining if I really want to do this at all. The SEC wars against prommissory note scams here: https://www.sec.gov/investor/p... Could you address a few key points with respect to Norada? Specifically:

1. Are your investments registered with either the SEC or with the California Department of Financial Protection & Innovation?
2. Who at your firm is licensed to sell securities?

3. What is your note default rate?

Thanks in advance.

Nice job! I'm looking to invest in a DST and haven't seen yields anywhere near 8%. Everything I've seen is in the 3-6% range. Any recommendations?

I'm fairly new to DSTs, so reading this thread is really informative. But I don't (yet?) understand the negativity here.

The way I see it, the DST niche is for real estate investors looking to leave property ownership behind and "cash out" by deferring capital gains until the holding period is over (assuming you don't 1031 into another). The idea is that you truly cash out at retirement, at which point you will pay capital gains but at a MUCH lower rate due to low income. Meanwhile the DST earns 3-6% monthly dividends, and if you're in a multifamily property it appreciates essentially equal to the general housing market. I'm paying neither up-front commission (my brokers get paid by the DST management) nor ongoing commissions.

That seems like a pretty good transitional investment to me. What am I missing?

Couldn't get anyone on the phone at Hampton & Hampton. I'm having issues with a property in Clearwater and think it's maybe being mismanaged. Not looking forward to trying to find another management company during this time period of partial breakdown of society. If anyone has any other recommendations, I'm all ears.