Delaware Statutory Trusts
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Delaware Statutory Trusts (by Peter [NH]) Jun 24, 2019 6:34 PM
       Delaware Statutory Trusts (by Robert J [CA]) Jun 25, 2019 1:24 AM
       Delaware Statutory Trusts (by Peter [NH]) Jun 25, 2019 10:40 AM
       Delaware Statutory Trusts (by Robert J [CA]) Jun 26, 2019 12:06 AM

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Delaware Statutory Trusts (by Peter [NH]) Posted on: Jun 24, 2019 6:34 PM

Anybody looking into these? I just invested in one and am looking to do more I don't personally know anyone who are using these and would love to discuss. I have done some research. Also looking for other investment ideas.

Delaware Statutory Trusts (by Robert J [CA]) Posted on: Jun 25, 2019 1:24 AM

There are articles written on the subject, alternative investments for landlords. In short, any managed investment in real estate can go south because of a shifting economy. The sponsors try to leverage the investment with only a few percentage points away from loosing money or going bankrupted. Here is one example of a common DST or TIC:

Sponsor finds a poorly performing asset, such as a large apartment complex, strip mall or offices. They buy it under a shame corporation. They tidy up the place and quickly get new tenants paying higher rents to justify a higher price.

They they sell the asset to themselves under their real Corporate name in the form of a DST or TIC. Now they look for investors.

The original purchase price was $10,000,000. Then after a quick face lift they DST buys it from themselves for $12,000,000.. They now get 10% of the income for being the Sponsor and managers of the asset. Their sales forces gets a 7-9% commission when they sell shares to each investors.

So it will take the next 4 to 5 years in appreciation just so if sold, you will break even with all of the load and costs. Now you have to hold the property for 10 years to make money. But wait, every 10 to 15 years we have a down cycle. So if the timing isn't right, you will loose everything, or at best, hold it for a total of 20 years to get your money out of it.

Real Estate now is way over priced. Any DST or TIC is bound to have issues unless the Sponsor is a saint and good at what they do....The cream of the crop, or only 20% of them out there will give you a fair shake.... --47.156.xx.xx

Delaware Statutory Trusts (by Peter [NH]) Posted on: Jun 25, 2019 10:40 AM

Thanks. I hope the ones I pick out are not quite that bad :) but I am cynical and thought roughly all the same things you mentioned! I am doing 0 debt medical commercial buildings. These seem to be the right move for some of my assets at the moment. I don't want any control and I want all my money working for me (1031 exchange). If I can get $1500000 at 5% then that is about $75000 a year for the next 7 to 10 years. I need to lighten my load and not end up with a heart attack like some other business owners I know of.

Delaware Statutory Trusts (by Robert J [CA]) Posted on: Jun 26, 2019 12:06 AM

A few words of advice, when you do a 1031 exchange into a TIC or DST, you can go into three properties, not to put all of your funds just into one single investment with the same sponsors.

I had a commercial property with three tenants. I combined two units to make it into a Medical Clinic. This was in a "C" area that Clinics do well because the patients have no money and the government covers the poor's medical care.

When the government cut back on their social programs and came up with the ACA (Affordable Care Act) my tenant couldn't cover his costs. I had to evict him. It only took 9 months for the eviction and another 2 years to find a replacement tenant. High Cost Specialty Tenancy's are often hard to manager... When rented you get top dollar. When vacant can take years to find the right tenant. --47.156.xx.xx

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Subject: RE: Delaware Statutory Trusts
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