All Forum Posts by: Amit M.

@Norman Schultz hi and thanks for updating us, even though it’s been a disappointment :(

As I asked earlier (2years ago) in this thread: you hear a lot of success stories about DSTs when the market is doing well…and when we're in a downturn…it's usually crickets. And it looks like the institutional quality and low debt features of most DSTs aren't immune to good ole market forces. Numerous DSTs are now curtailing distributions, and I don't think they are even allowed to make capital calls, unless they blow up the DST structure and turn it into a taxable (and very unattractive) syndication.

So I think carefully considering market cycles is still a necessary analysis, even though it’s always a guess or speculation on the investors side. But I know I made the right call when I sold some properties end of 2021/early 2022, and did not 1031ex, but rather paid taxes and eliminated debt on the properties I wanted to keep.

I'm hoping to keep what I have for as long as a I can stand managing them (at least they are nice properties in prime locations…but as I get older my tolerance for hassles diminishes ;) So I don't fool myself for a second acknowledging that there are all kinds of external factors that may compel me to sell. Hence I'm still keeping DSTs as a future option. Without a great next move option like I had before (eliminating debt), paying cap gains to get to a cash position is very expensive. And for what? To dollar cost average into an S&P 500 index fund? Honestly I'd probably end up diversifying sales proceeds into stocks and some into DSTs to broaden my base. I don't think I'd do a STNL NNN property as the cap rates are still quite low, and it's an all or nothing bet…and there have been plenty of formerly "solid" STNLs going dark left and right, and in all sorts of decent markets. Unless you specialize and invest a lot of experience and knowledge into STNLs, I think the risks are just too highly concentrated to dabble in that space. So as of now I'm keeping my select rentals and hoping they make a nice equity appreciation comeback in the future!

Keep in mind, the real estate market is generally in the sh!tter big time these days, so you need to be very careful to not get burned. As we speak syndications are blowing up left and right, so buyer beware. Although DSTs are more conservative, they ain’t doing so hot either. Plus I don’t think DSTs make sense unless you need the 1031ex privilege.

If you want passive RE exposure why not look into REITs? You mentioned generating income, but I’m not sure that you’re better off investing in stocks, bonds and REITs. I wouldn’t solely rely on dividend income, as you’re probably better off applying the 4% (or 2.7% or whatever) rule and sell off to use as income.  But I’d be very careful of syndications right now; high risk in my opinion.

my2c

For better or worse…this is turning into quite the popcorn thread ;)

caught

pants

down

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3words

Get your first property, then we can talk. Right now it’s all hat no cattle. 

I think you mean “syndication is not PASSIVE investment” right?!? It’s active in the sense that you need to do a lot of due diligence to separate the sh!t from the shinola…sort to speak ;)

See this is the reason I personally stayed away from commercial RE, incl. multi family. I always worked with 2-4’s because I could secure long term 30 year financing. It doesn’t sound like refinancing nowadays dried up like 2008-2010, but man I remember how bad banking was those days! Thank god I was with 30 years fixed and just rode out the bad times until 2013 when banks became liquid again. Of course ironically, now I don’t even need the 30 year fixed term, as I deleveraged completely and just own outright. I took my gains and sold my 2014/15 acquisitions in late 2021/early 2022, and repositioned my long term prime rentals debt free.

In the RE game you have to know when to take your profits. I (unfortunately) know people that go boom and bust every cycle! And it’s almost always leverage or untimely refinancing that gets them screwed. I guess I’m just not cut out for that sort of drama, so this cycle I just took my marbles and went home. BTW I’m seeing more and more properties turn in my market from folks who brought in 2019-2022 and are now getting spanked big time. It’s sad seeing a 2021 purchase for $1.8 mil now offered for $1.5, and who knows what it will actually close at. You know that person just got royally f*cked. 

Stay safe and sane out there!

@Jeffrey Zhou the situation you describe is not good. You’re kinda stuck, as you can’t clearly “evict” the tenant…maybe only if there were hazardous conditions. Otherwise the bldg dept, etc. aren’t going to stick their necks out to help you force an eviction. 

But there is a solution….always the solution here in SF. Basically you’ll need to buy out that tenant. And if they have one of those schmucky lawyers (free for the tenant btw….while you’re paying $400 per hour for yours :( you’ll be paying that tenant a lot of money to leave. Could easily run you six figures.

It’s an unfortunate situation.

@Carlos Ptriawan I’m more aligned with your pov. The key issue, in my mind, is that syndications are motivated to *transact deals*, in good and in less good markets. Why are so many decent, seasoned syndicators in trouble now? What they should have done is not brought low cap deals in 2021-2022. Some are even losing money on their 2020 purchases.

I’d like someone to show me syndicators that said, “nope we’re not buying more deals because we don’t think we can make a decent return for our investors.” It’s more like most just keep going and going. But, I don’t fully blame syndicators. I also blame naive LP’s providing the money for these late cycle deals. There is a codependency at play, so this is not just a rant against syndicators. At least not in my mind. 

Basically syndications, and a lot of other office and residential commercial is in real trouble over the next 1-2 years. They’re praying for 3x fed rate cuts this year, to stimulate refi’s and new buyers. But if that doesn’t materialize, or if we hit a recession, it’ll get worse.

My personal advice is, if you don’t already own stabilized real estate, in solid areas, with fixed debt or low/no mortgage…take the 5% return available now for your liquid savings and wait. Cowboys can get in the market now rebuying recent failures at discount, and hoping to ???. But I’ll pass, as I like keeping my early retirement and prefer staying in cash with new money. We’ll see what the future brings.

Best to everyone out there!