I would really like to cut back some more. I had it down to three houses and then inflation was eating up my funds, so I bought a fourth house. I am tired of tenants and I want out. But I am gagging on the thought of the capital gains tax.

The house that comes vacant next month, I bought for $225,000. The house 2 doors down is listed for $775,000.00. It is a bit bigger but the same tyle, the same builder, the same quality. It hurts me to the very bone to think of giving that much tax money to Uncle Sam. Plus reclaiming the depreciation.

Here is the discussion that Brad (20,000) started and some responses:

Bought commercial (by BRAD 20,000 [IN] ) Posted on: Aug 16, 2025 11:00 PM

Message:

Commercial without playing LL.

Today's update on selling props via 1031exchange and investing in DST Delaware Statutory Trust.

Sold a Class A pretty house and 2 junkers I have been "hoping" to get to for YEARS as they sat empty. Even still got a good price for them.

APIexchange.com did the paperwork and held the funds.

On day 37 of the 45 day deadline to "identify" replacement property I bought a SHARE in a DST which owns 12 properties.

We now own 1% of those 12 props which include an Aldi, 2 Dollar Generals, a Dollar Tree, a Wawa, a Tractor Supply, a multi location Health Clinic, a multi location health food store in the Northwest, a kidney dialysis clinic, and more.

All solid, growing businesses. Diversified over 12 props. The DST owns the properties, not the businesses who rent the property.

The return on investment is 5.125% autodeposited in my checking account on the 15th of every month.

Some will argue that's low, but I get paid for doing NOTHING, no maint, no evictions, no prop taxes, no insurance, no inspectors, no translators, no court, no showings, no applications, no advertising, no calls, no utils, no frozen pipes of clogged toilets...and no need for Robert J's bullet proof vest or pepper spray!

If there is a legal issue THEIR TEAM of lawyers handles it, no cost to me, instead of attys challenging me as owner/LL.

I'm CLEARING more CASH income than the total rent before expenses on that pretty house.

Different solutions in different times as our goals change.

BRAD

--68.45.xxx.xxx

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Bought commercial (by MMIT [VA] ) Posted on: Aug 17, 2025 7:43 AM

Message:

Brad,

Are you going to 1031 more properties and 1031 into another DST?

Is the 5% - 6% typical for your return on equity for your rentals?

I am beginning to question if real estate is as good of an investment as it used to be.

My true net profit (after taxes, insurance, maintenance, cap ex, vacancy, property management, etc) as a percent of the equity of the property is around 6%.

I am looking at 3 options:

1. 1031 into a DST and defer the taxes

2. 1031 into a deferred sales trust and put the money in the S&P 500

3. Sell, pay the taxes, and put the money into the S & P 500

Yes, I think the real estate market has shifted.

Rents in this area have maxed out to the point that my “shacks” are almost unaffordable for the market. If interest rates drop, prices will do up again and my return on equity will be lower than it is now.

Good luck!

--98.163.xx.xxx

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Bought commercial (by zero [IN] ) Posted on: Aug 17, 2025 8:00 AM

Message:

I have questions about the DST's as well.

The return is good, especially when you factor in not having to do anything with a property or tenant.

Would you not get a higher return with the S&P 500? I know you are dealing with pre-tax money so that has to factor in.

Is it just that for shorter terms the DST is more of a guaranteed return? I know when we moved our money over from an old 401k to a money guy he started out talking about returns in thirty or forty years. That isn't something I care about as in forty years I will either be gone or comfortable enough not to worry about the returns.

Would the DST be as appealing to you if you were not getting into it via the 1031 exchange?

--107.147.xx.xx

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Bought commercial (by 6x6 [TN] ) Posted on: Aug 17, 2025 9:08 AM

Message:

I understand that you deferred capital gains taxes but are you going to pay tax on the dividends?

How does that work at tax time? --73.19.xxx.xx

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Bought commercial (by Ken [NY] ) Posted on: Aug 17, 2025 9:20 AM

Message:

what happens if the DST goes under? is there underlying mortgages or they have no debt just a bunch of owners? --98.98.xx.xx

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Bought commercial (by plenty [MO] ) Posted on: Aug 17, 2025 9:28 AM

Message:

Standby on your chair and yell "Freedom" --172.59.xxx.xxx

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Bought commercial (by ned [AL] ) Posted on: Aug 17, 2025 9:50 AM

Message:

I get the whole deferral of cap gains is attractive...but man...I'd be hoping to 1031 my shacks into something pretty passive I can eke out 6.7.8.9 percent on...

Like my own triple net --74.135.xx.xx

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Bought commercial (by RB [TN] ) Posted on: Aug 17, 2025 9:50 AM

Message:

The truth is how we perceive it. --204.10.xxx.xx

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Bought commercial (by GKARL [PA] ) Posted on: Aug 17, 2025 10:09 AM

Message:

Something to consider. The return isn't bad considering you have the upside of appreciation as well and it's totally passive. There are a lot of multifamily syndications in trouble, so I'd be cautious in that area, but commercial and industrial works. My only other concern is liquidity but that's addressed by not betting your entire wad. --23.28.xx.xx

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Bought commercial (by ned [AL] ) Posted on: Aug 17, 2025 11:07 AM

Message:

True, on the upside of appreciation.

I'd factor 2% in to my math for that.

Makes much more palatable. --74.135.xx.xx

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Bought commercial (by Ray-N-Pa [PA] ) Posted on: Aug 17, 2025 11:24 AM

Message:

Debt in a trust is no recourse.

I applaud what you are doing Brad - great mix of first tier and second tier tenants if you were buy these NNN properties individually. That adds diversification into the mix.

The two points that I am not a fan about are: in a DST, someone else controls the sales timeline and the cost of gaining that diversification shaves about 1-1.5% off the Cap Rates on these places. The plus side in addition to the diversification - instead of just getting any say Aldis, you are getting the ownership interest in the most sought-after ones.

Someone asked what happens if the places go bankrupt. That is indeed a possibility I suppose........Aldis, Dollar General and Tractor Supply could all bankrupt together if they are operated by the same franchise company - but the probability of that is rather small and if that happens, mom and pop landlords would have all been wiped out years earlier.

No lets see - how much management headaches will you have.....oh yeah, you will have to check your email monthly to make sure your deposit is correct. That is it. Trade in a dozen house headaches so you to check your email monthly.

Appreciation is not guaranteed, but with professional eyes looking after it - things look beter than with mine --98.17.xx.xxx

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Bought commercial (by Ray-N-Pa [PA] ) Posted on: Aug 17, 2025 11:25 AM

Message:

Congrats --98.17.xx.xxx

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Bought commercial (by Ken [NY] ) Posted on: Aug 17, 2025 11:28 AM

Message:

Ray,I would trust your eyes watching a deal over that of a so called professional who may or may not care one bit --98.98.xx.xx

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Bought commercial (by BRAD 20,000 [IN] ) Posted on: Aug 18, 2025 2:01 AM

Message:

Some quick replies...

This is my 48th year in RE. I don't want to die hunched over a toilet tightening floor bolts.

I also need to consider LLing in my senior years. Wifey and I have both survived cancers that kill some folks. No one is guaranteed tomorrow.

If I consider the amount I can sell for now, compared to the rent I can collect, we're below the old 1-2% rule. Sell for $266K but rent was only $1300. I paid $70K for the house 10 years ago! So the $266k home is providing $13,619 DST cash flow, 19.5% ROI on my original $70k investment.

Actually the renters paid me back the $70K over the years so my investment is $0.

These props are fully depreciated so I've lost that tax shelter and would have BIG depreciation recapture tax without 1031.

I am keeping the "Creme" props that are easy and profitable like those in my 401KRoth. (tax free rent!)

No investment is guaranteed in life. The two DST I am in are both multiple properties, 6 props and 12 props. If one business goes belly up there are 11 more still in place and that building is available to re-rent.

I am INCREDIBLY conservative so these DSTs are highly researched by the firm I use and super secure/stable. Out of the 83 DSTs on the market THIS ONE was the best.

I am partial to "Silver Tsunami" as in Boomers needing healthcare, (healthcare, dialysis, senior living) and economic troubles such as people buying from discount sellers such as Dollar General.

If the DST has debt it is non-recourse meaning they don't come after my house for payment.

There is no such thing as "Triple Net". Dollar General has more attys than me so they can pressure me for new roof, AC, etc if I am the sole owner. The DST has Lots of attys on MY side to negotiate, etc.

Right now I need $1.5 Million to buy a Dollar General at a 6% ROI. I don't have this much cash at one time and I don't want debt. Been there, almost lost it all.

I can sell one house and 1031 it into a DST for 5.12% - done. Then another, and another...

The latest DST has debt which means the equity increases each month with amortization, and hopefully it will appreciate. So I share in larger equity and appreciation - meaning when they sell it 5ish years from now I'll see more than my 5.12%.

It's not liquid but I DO get monthly cash into my checking account. My investment is committed until the DST decides to sell, usually a few years from now. when they sell I can simply roll it over into another DST or a REIT. Something Wifey or my kids can handle if I'm gone.

My goal is to PARK the money and let it pay me.

I lost $150K in the stock market. It went to zero. Dad invested $1500 in my name for his grandkids. 10 years later, AFTER FEES! it was worth $1500. Even pros will say it's professional gambling.

I know Dave Ramsey and others promote it for the long term (people who don't invest in real estate) but I would have to sell and lose 37% in taxes to buy stocks.

People brag about how much their stock went up but I notice no one ever admits when it goes down. Gains are on the DOWNed amount and take time to recover.

No cash flow during the investment, and tax on the gain when you pull it out.

"I made 20% this year!!" But can you spend it? How much is left after taxes?

I'm no expert, consider your own situations.

BRAD

--68.45.xxx.xxx

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Bought commercial (by Ray-N-Pa [PA] ) Posted on: Aug 18, 2025 7:09 AM

Message:

I am only saying that Cap Rates on new construction large class A Multi Families has be decompressing for three years now in areas that were over built and in the sunbelt.

For those who bought into these DSTs, they are not only not getting appreciation, they lost capital. At least they do get a monthly check --98.17.xx.xxx

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Bought commercial (by GKARL [PA] ) Posted on: Aug 18, 2025 9:03 AM

Message:

Brad, makes sense. Stock market is a crap shoot and as you point out, usually there's no cash flow. I think it's wise to think forward to when one is older. --23.28.xx.xx

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Bought commercial (by tryan [MA] ) Posted on: Aug 18, 2025 9:19 AM

Message:

I wonder if there is a DST specializing in the Silver Tsunami (assisted living, Emergency care clinics, hospitals, pharmacies ...) --66.30.xx.xx

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Bought commercial (by 6x6 [TN] ) Posted on: Aug 18, 2025 12:56 PM

Message:

Thank you, Brad. --73.19.xxx.xx

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Bought commercial (by Ray-N-Pa [PA] ) Posted on: Aug 18, 2025 1:37 PM

Message:

Tryan - absolutely. You will need to be an accredited investor --98.17.xx.xxx

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Bought commercial (by Tim [CA]) Posted on: Aug 20, 2025 11:40 AM

Message:

Thanks Brad for posting this. I've done 1031's before so no questions about that aspect of the deal, however, I've been looking into DST's casually and keep running into roadblocks. How did you find the DST sponsor you used? Did you find a DST counselor or CPA familiar with DST's to help choose which sponsor you used for the DST? I like your spread of properties, but haven't found any sponsor with those types of DST's. I've heard the least successful sponsors are those with ads all over the internet.

Thanks again for the info you did post. --98.255.xx.xx

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Bought commercial (by zero [IN] ) Posted on: Aug 21, 2025 9:15 AM

Message:

I am curious as well, Brad.

Might be interested in testing the waters with a DST. Not all my eggs (which are very few), but some to see how it goes. --107.147.xx.xx

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Bought commercial (by Chris [CT]) Posted on: Aug 21, 2025 2:53 PM

Message:

Interesting, I'm turning 40 in a week and I think by the time I hit 50 I'll look into investing into one of these. I was having lunch with a friend of mine who is a money man and he was talking about them, they are interesting. The one he likes pays 5% than after two years 6% and you can take out the money if you find another deal to 1031 into.

I wouldn't divest all my real estate, but I do have three complexes with a partner that I will have to figure out what to do with at some point. I don't want to be business partners with his heirs.

I look at it this way, the properties are probably worth $13-$14 million, I own half. In 10 years our debt service will probably be down to 4 million on all of them. Right now I'm pulling out $168k a year and managing them myself. $4m in one of these trusts @5% a year is $200k a year. That's more than I am making now and I don't have to run these properties, and I get to diversify out of my area into a different mix of holdings. Also it gets me free of my partner without the tax hit of a sale, and my ammo is ready if I come across a really good larger deal.

--32.216.xx.xx

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Bought commercial (by BRAD 20,000 [IN] ) Posted on: Aug 22, 2025 12:50 AM

Message:

Tim and others,

My guy is Andres with JRW in California 626-629-0902. Please use my name.

His firm is VERY conservative and analyzes all the available DSTs deeply, then ranks them with 4 levels. They look at things I've never thought about.

Good DSTs sell out quickly. Of the 83 on the market that day they only recommended the one I bought plus 1 more - 2 out of 83. I had about a week to make a move before it was gone.

BRAD

--68.45.xxx.xxx

________________________________________

Bought commercial (by BRAD 20,000 [IN] ) Posted on: Aug 22, 2025 12:54 AM

Message:

PS I learned today from Andres that MY NAME has to be on the sold property deed or me be the beneficiary of a trust. My share of an LLC would not work (easily). Easiest for partnerships was Tenants In Common (TIC), then I could pull out of the TIC and 1031 my equity into DST.

FWIW

BRAD

--68.45.xxx.xxx

________________________________________

Bought commercial (by zero [IN] ) Posted on: Aug 22, 2025 7:48 AM

Message:

Thanks for the added info Brad.

What are the buy ins for these DSTs? If you sold a cheap house and had say 30 or 40k would it be worth it?

Also, once you buy in do you have the option of buying more shares (or whatever the percentages are called)? --107.147.xx.xx

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Bought commercial (by Tim [CA]) Posted on: Aug 22, 2025 2:02 PM

Message:

Thanks Brad. Your info is very much appreciated!

Tim --98.255.xx.xx

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Bought commercial (by BRAD 20,000 [IN] ) Posted on: Aug 22, 2025 5:01 PM

Message:

Another note: DSTs require you be an ACCREDITED INVESTOR - net worth of $1 million or more, not including your residence.

BRAD --68.45.xxx.xxx

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Bought commercial (by WMH [NC] ) Posted on: Aug 22, 2025 5:42 PM

Message:

Personal net worth, or total net worth, I wonder? Meaning we own two LLCs...do they count? --173.28.xx.xxx

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Bought commercial (by zero [IN] ) Posted on: Aug 22, 2025 5:50 PM

Message:

I'm in.

Plus if you count all the tools and such I am in even more.

Now if they mean liquid assets I am hurting for sure. --107.147.xx.xx

________________________________________

Bought commercial (by Chris [CT]) Posted on: Aug 25, 2025 5:18 PM

Message:

Or make $200k a year, $300k as a married couple. --32.216.xx.xx

Opinions on DST's (by Tim [CA]) Posted on: Jun 2, 2025 3:58 PM

Message:

After 40 years, I'm looking to get out of the rental game. I don't consider myself a pessimist, but looking at all the market and economic forces, although I think it will continue to be a money maker, I don't think it will ever be as good as the last 20 years have been. I manage my rentals and have good tenants. Unlike Robert J, I've never been to court for the rentals in 40 years.

I've always been thrifty and old habits don't change. I retired from what was a very lucrative engineering career and, as it turns out, the rentals were overkill...I don't need the money for me or the kids, and a lot of it will be going to charities. The kids aren't interested in the rentals and are doing very well on their own. Doing 1031's into commercial property doesn't appeal to me.

One option I hadn't heard of is DST's. I'm curious what people in the biz think about them. I'm skeptical.

My other option would be to just sell, pay all the tax and invest that money.

The properties are worth in the range of $600k to $700k each, so finding someone to carry a note for doesn't happen in my region very often.

--73.2.xx.xx

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Opinions on DST's (by Ken [NY] ) Posted on: Jun 2, 2025 4:57 PM

Message:

Congratulations- no need to hold a note currently, list them and let the buyers fight over them --159.65.xxx.xxx

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Opinions on DST's (by Robert J [CA] ) Posted on: Jun 2, 2025 5:39 PM

Message:

There are articles, books and free seminars on DST and 1031 exchanges. Like property into like property. That does not mean SFR into SFR, but instead real estate (Land with a structure) for another type investment.

I've taken many Single Family homes INTO Units, Rentals into Strip Malls, property where people sleep over night to commercial office buildings.

But my favorite is residential income rentals into LAND WITH OIL DRILLING. For $100,000 you get 10 drills for oil wells. If two fail, then Noble gives you a producing well. So with 10 drillings you have a guaranty at 3 of 4 wells -- up to 10. Each one giving you 10-15% return on your investment. And you can 1031 out of it.

Another one was a Stock Holding. I can sell any number of shares when I need money, then pay the long term capital gains tax. --47.155.xx.xxx

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Opinions on DST's (by RB [TN] ) Posted on: Jun 2, 2025 6:31 PM

Message:

Tim - Congratulations !

Ya made it this far. I have no doubt you will

continue to make profitable decisions.

Welcome to the Sellers Club.

--204.10.xxx.xx

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Opinions on DST's (by Ray-N-Pa [PA] ) Posted on: Jun 2, 2025 8:29 PM

Message:

In an upward market, DST's are awesome Capital Preservation tools. Currently they are yielding only 3.8-5.9%. In a downward market place, you can get wiped out. Additionally, the DST sponsor will be telling you when the pull out time is so you will be doing another 1031 at their whim, not yours.

So DSTs have a spot in my holdings? Absolutely. I can use them to fill small voids left when you buy a replacement property in a 1031 but it isn't larger than the property that you are selling.

What you are describing, I wouldn't be considering a DST. Why not place the property into a trust, and you sell small fractional ownership and give management over to the administrator? That or a totally hands off NNN property would allow you retire in peace. --67.140.xx.xxx

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Opinions on DST's (by bbqboy [GA]) Posted on: Jun 3, 2025 1:39 PM

Message:

Are you asking about a Delaware Statutory Trust (DST) or a Deferred Sales Trust (DST)?

The deferred sales trust sounds great, but I don't know what it costs to set up and it seems pretty scheme-like. --108.207.xxx.xxx

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Opinions on DST's (by Fame City [OH]) Posted on: Jun 3, 2025 3:37 PM

Message:

I have had great success with Delaware Statutory Trusts. The returns aren't as high as I would prefer but its 100% passive and I feel like as long as you vet out the sponsors they are safe. I've stuck to larger scale luxury housing projects with larger sponsors (Pasco, Cantor Fitzgerald, Carter Exchange, Capital Square, Inland and Blue Rock).

I had a large volume of less desirable properties that I thought were worth as much as they would ever be worth ($100K each). So I sold them to out of state investors, put the proceeds into a 1031 Exchange and reinvested into DST's.

Again the return wasn't as high as the rental unit got but when looking at the overall situation I would recommend it. Especially for a portion of anyone's investment portfolio. --8.40.xx.xxx

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Opinions on DST's (by JS [CA] ) Posted on: Jun 3, 2025 11:42 PM

Message:

I’m in the process of an exchange now and I keep thinking about DSTs as well. For me it would just be with leftover money but I’m so skeptical about the whole thing that I think I’ll just add more money and buy another property. --162.204.xxx.xxx

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Opinions on DST's (by JS [CA] ) Posted on: Jun 3, 2025 11:42 PM

Message:

I’m in the process of an exchange now and I keep thinking about DSTs as well. For me it would just be with leftover money but I’m so skeptical about the whole thing that I think I’ll just add more money and buy another property. --162.204.xxx.xxx

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Opinions on DST's (by Matt- OC [CA]) Posted on: Jun 6, 2025 5:25 PM

Message:

Tim- where in California are you? I'm in Orange County. I'm always looking to buy, let me know if you want to talk. --99.190.xxx.xx

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Opinions on DST's (by Matt- OC [CA]) Posted on: Jun 6, 2025 5:25 PM

Message:

Tim- where in California are you? I'm in Orange County. I'm always looking to buy, let me know if you want to talk. --99.190.xxx.xx

There are properties out that require almost nothing in the form of oversite. You can seek out one of those places since you are at a price point where they are possible.

Other options include completing a 721 exchange. In doing that, your exchanging days are over and you are now limited to investing in UPREITs

You could also set up a Charitable Remainder Trust. With those you give the property and management away and receive income for your expected life along with annual write offs.

I’ve now had a couple of DSTs now for a year and it’s been trouble free. One lowered the return by .5% so that sucks but the reason was legitimate.