All Forum Posts by: Account Closed

This is the case. I didn't want to take things in this direction and make it confusing but it is an investment property now but was a residential property before that.

Yeah you can't use section 121. If you're doing a 1031 exchange, you have to buy a property for the full sales proceeds or you will have to pay taxes on whatever is left over. If you sold for $1,000,000, you have to buy for $1,000,000. Debt included. Talk to your QI, I think you need a bit more clarification as to how the 1031 exchange works.

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I sent you a message with some information. Our office is close to LAX, I'd be happy to go over some options with you.

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There are no other particular strategies such as the 1031 that allow you to defer capital gains tax. However, you may be able to take advantage of the Delaware Statutory Trust (DST) as others have mentioned. I've sent you a message with some more information!

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Hi Ed,

I'm going to send you a DM with a scenario that can work.

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Quote from @Carlos Ptriawan:

Quote from @Jon Taylor:

Quote from @Carlos Ptriawan:

Quote from @Jon Taylor:

3.5 - 5

after all the commission and expense :)

Fees aren't bad actually. That stigma in DSTs has really driven the fees down to be comparable to a typical real estate transaction - if you factor both sides of the transaction... The real problem is that values are still so high and the cash flow is taken up by interest rates that have doubled. Seems like they are betting on residential rent continuing to go up at record-high growth rates. Tough bet to make.

This is where DST can be useful because of its uniqueness.
We know the DST is not the best-performing asset in terms of expense and cash flow, maybe the actual CF is only 2-4%.

Knowing this, a unique vehicle like zero coupon interests me. It's ok if I don't receive any cash-flows, but rather than my capital gain tax per dollar is 25-30 per dollar. I could replace with ZC paying only 14-18 cents per dollar. I think it has value after I do several step transactions.

Yes you’re right about Zero Coupon DSTs. We have actually started to do a lot of Zero Coupon business because the cost of money is too high. Investors can invest some of their equity in a zero coupon, which will then replace all their debt. They can then go to the market and will be an all cash buyer and won’t have to worry about financing at 7% interest rates.

1 Vote

Quote from @Jon Taylor:

Quote from @Carlos Ptriawan:

Quote from @Jon Taylor:

3.5 - 5

after all the commission and expense :)

Typically we're seeing 5-5.5% net returns for our clients. Most DSTs now we're bought when interest rates were still low, so they locked in interest rates at 3-5%. And it's not that they're betting that it will continue to go up like it did in the last 10 years, but multifamily with 100+ units with luxury amenities do have a huge growth potential. Considering that Gen Z likely won't be able to afford to buy a house, these multifamily buildings are the next best thing. But that's just my opinion.

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Quote from @Jon Taylor:

IMO DSTs have extremely low cash flow targets. If it's not a motivated seller, I don't think DSTs are going to push anyone over the edge in this market.

What cash flow have you seen in DSTs?

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Quote from @Carlos Ptriawan:

Quote from @Account Closed:

Quote from @John McKee:

The problem with a DST is that you are burying your cash and cannot build additional equity, borrow, has limited tax advantages, and the biggest is you can't use leverage to grow your wealth. I.E. your money is stuck, so I guess it depends where you are in your investing career. Great point @Loretta Gray about using the DST for that left over boot money.

Not sure where you're getting this info from but

#1 you can build additional equity through the appreciation on the property

#2 You can use non-recourse debt with a DST, therefore leveraging your equity

#3 There are a lot of tax benefits with DSTs, including depreciation.

I'd recommend looking more into DSTs...

I will give you #4. I will help you sell DST :)

The projection of return of CRE during high interest rate like today, could be more interesting rather than investing at DSCR SFR with 9% interest rate rate.
Rather than having SFR with 9% interest rate , 1% appreciation and 1% CoC, I'd rather invest in industrial space DST down south. with 6% cap rate.

In one of area where house is sitting at 3 mils near here, there's always a meeting the DST broker selling the idea, that's the right target audience I guess.

Thanks!

I also want to add that a lot of the properties in a DST were bought months ago, then placed into the trust. Meaning that the interest rate they locked in was before rates went up, a lot of the current DSTs have 3-5% interest rates.

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Washington, DC

Quote from @John McKee:

Not sure where you're getting this info from but

#1 you can build additional equity through the appreciation on the property

#2 You can use non-recourse debt with a DST, therefore leveraging your equity

#3 There are a lot of tax benefits with DSTs, including depreciation.

I'd recommend looking more into DSTs...

2 Votes

Washington, DC

Quote from @Lumi Ispas:

@Loretta Gray, you can also avoid the 3Ts by buying a double or triple net leased property and you get all the benefits from purchasing the property with little or no risk.

Ehhh not quite. When lease renewal comes, typically the tenant is in favor and the landlord will get screwed over unless the landlord is a multimillion-dollar real estate company. Tenants know if they leave, the landlord is screwed, so they can play with the numbers and make the landlord not have much cash flow. Plus, every year that the lease gets closer to expiration, you lose value in your property.

1 Vote

Washington, DC

All Forum Posts by: Account Closed

Account Closed has started 5 posts and replied 73 times.

Post: Can I do a 1031 with the capital gains portion of the Sale......

Post: I have a 1031 exchange 2 M total

Post: Alternatives to 1031 Exchange to Avoid Capital Gains

Post: 1031 Exchange scenario with low credit score

Post: 1031 Exchange-purchasing from seller who doesn't want to repeat

Post: 1031 Exchange-purchasing from seller who doesn't want to repeat

Post: 1031 Exchange-purchasing from seller who doesn't want to repeat

Post: 1031 Options & avoiding the 3Ts Tenants Toilets & Taxes!!

Post: 1031 Options & avoiding the 3Ts Tenants Toilets & Taxes!!

Post: 1031 Options & avoiding the 3Ts Tenants Toilets & Taxes!!