1031 Exchange (Including Syndication) and DST

So we are doing this three part series saving on capital gain. Last time we talked about Opportunity Zone. Today we are going to talk about the real estate capital gain taxes with 1031 exchange including syndication which is very interesting and also DST. So I would like to welcome our guest today. Welcome Brandon.

It's good to be here. It's good to be back.

Yes. It's been just a week. So welcome. This is such an important topic. We were just talking about a couple of minutes back that these days the real estate prices are soaring and with the prices, with the high prices comes high capital gain too because people have been holding on these assets for a few years, five years, 10 years or more even maybe their first house has been, they have moved to another house now and they're selling their rental properties. So with that it's a problem of this capital gain taxes. And last week we talked about Opportunity Zone which provided solution for the capital gain taxes for stocks as well stock business sales as well. Today we will focus on that real estate give you more options and to avoid paying that huge, huge tax bill. So I'm really excited about this. Let me start by sharing my screen. So yeah, today we are talking about 1031 exchange with syndication as well as DST. A little bit disclaimer from our side, this is education and information purpose only. We are not any legal advisors, tax advisors. So if you are an investor please, you know, please do your own due diligence. We are not responsible for, we're not offering any investments or anything for of that sort today. So please seek your own legal help, tax help, whatever you need to go ahead and implement these strategies. Also note that if we have been using any examples in this presentation those are point in time and it's highly, highly associated with multiple factors including the market. So just treat them as examples only just for your understanding going ahead. Most of you know about me. I'm Madhvi Nader Jain. I'm president and wealth strategist at Think Outside the Stocks which is a commercial real estate focused educational and investment company. I also help with Infinity banking strategy to make your lazy money in the bank work hard for you. In my past experience in my past life I worked in IT industry most of the time in project management about 17 years or so in a big five consulting. But ever since I found out about this alternate world of investing, my true passion is about this education which we are part of it is today. I'm so passionate about bringing these different strategies to you as investors and providing different options just Outside of that Wall street roller coaster and Brandon here, our guest today. Brandon is focused on the 1031 and DST business as well as adding investment clients with Insight 1031. He also leads marketing and investment due diligence effort there. Prior to Insight he founded West Chapman & Co. A consultancy that assists clients in growing their business by gaining insights through data. Brandon also assists large and small businesses in industries ranging from financial services to logistics to pharmaceutical. So it's pretty wide, you know, consulting that he provides. He also worked in Chapman & Co. As a hedge, as a prominent hedge fund as a head of fixed income financing. Following that experience he also co founded Healthcare consulting assisting hospitals to make their vendor selections. So now he's serves on the board of repairs of the Breach, that's a daytime homeless shelter in Milwaukee in and he's also a board of apartment association in southeast Wisconsin. So that's a little bit about Brandon. He welcome Brandon again. I really look forward to this just a little bit brief about what we do here at Think outside the stocks. Think outside the stocks. As I mentioned we focus on that wealth maximization. So from my perspective, I like to take a step back, kind of a bird's eye perspective into helping my investors with growing, preserving, protecting and passing their wealth to the next generation. So in terms of getting that lazy money in your bank working for you with the first fold which is the infinity banking system and second fold which is the risk managed syndicated investments in real estate across the emerging market in the America, that's basically the two fold approach. And as I said before, the education is the core of it that I really really am very passionate about. So with this we have the three part series to save your capital gain. We talked about Opportunity Zone last week. This week we are going to talk about 1031 and next week right after, within seven days we will talk about how to choose between these three. There'll be some case studies, some examples that Brandon will be proposing. Also if you have your particular case study, if you have any numbers from sales that you have been trying to do coming out of that, just bring in those numbers to the table and we would love to discuss that as an example as a case study. With that over to Brandon, I think I will just stop sharing. Go ahead Brandon, please.

We should call that next section. We should call it next section like Excel Live because that's what it's gonna feel like is just going for it.

Oh yeah.

With some real examples which. Which I think is really fun.

Yeah, I love playing with the numbers that could be really right, really exciting.

And that and that not to, not to tip our hand or get too excited about it. But I mean, I think that piece gets, gets really interesting to start to really review because these options are, they need an Excel model, frankly, for you to decide which, which one you're going to do. So we'll get to that next week, though. We're going to. And thank you again for having me and folks joining. There's such a good fit, I think, between, as we continue to have these conversations, between what you're doing with Think Outside the Stocks and the way that we approach things with our investing clients as well. It's the same thing and it's going after some of these strategies that sort of off the beaten path, to say the least that folks just don't know about. And there's not a lot of education on it. So bringing that to the, to people is the same sort of stuff that we're doing. Here's my disclaimer. Everyone read that. Say yes, I've read it. Yes, I've read it. Good. Thank you. So we're going to talk about, I want to talk about really three things today and I want to start really with 1031 exchange and just understanding that process. So understanding why we do that, what it is, what the tactics are and the rules are extremely important because whatever we're thinking about sort of after a 1031 exchange, all falls down if we don't don't do this. Right. So all the work we do to do, all the Excel calculators out, all goes out the window if we don't do 1031 exchange. Right. And so, so let's start there on those rules. I'll kind of attack it from a high level. I'll move on from, from there. So what, what is a 1031 exchange? You hear a lot about this in the news. You hear this thing. Well, what is it? What does it mean? So if you own investment real estate today and you look to sell that investment real estate, more likely than not you'll have some level of capital gain. What a 1031 exchange allows us to do is to defer that gain and invest in another piece of property. So that's phenomenal when you sort of think about it. It's one of the things that no one told me about real estate at all when I was a younger man. As you went through my background at a hedge fund, I would shun real estate. Cause I said that stuff's not liquid. I don't want to be involved in that. If I can't sell it, buy it today and sell it tomorrow. I don't want the. Well, I don't want that. Well, no one told me about the taxes and no one told me it could defer all these gains either. They skipped over that part. So it's so critical. So clients that are coming to our desks have these massive tax bills because they've been holding real estate for 20, 30 plus years that they have a bill that's very substantial. And in some cases that bill can be as high as 40% of your potential sale there. That's a lot of money to be giving up in that sale. And we don't really want to do that. So 1031 is this mechanism that allows us to defer and we always say start first, like why am I going to 1031 exchange? Why should I do that? And inevitably when we start having the conversation with folks is you may have these tax consequences, but you really want to spend some time with the CPA to understand that what is my tax bill? Before you even start down this path of thinking about doing a 1031 exchange, before you start down the path of thinking, hey, I really want to sell my property, that's the time to really have that conversation with the CPA and to understand that what is my tax bill? What are the things that I'm going to have to pay for when I do sell the properties? Is not only the capital gain that you're talking about. There's depreciation, recapture, there's a Medicare surcharge, all these things. And state taxes as well as federal. All these things add up to a bill that's rather significant in most cases. But again, you really want to check with cpa. I do want to make this point too. Here is this is we are talking about deferring taxes, not eliminating them. So last week we talked about opportunity zones where there's some space to eliminate tax. Here we are deferring, we're deferring. So that bill does come up down the road. However, it is an option here as the law is still written. We pray that it keeps that way, that there is a stepped up basis at the end. So a strategy that we hear very often from real estate investors is as crude as this sounds. I'm going to swap properties until I drop and then I'm going to take advantage of the stepped up basis at the end. That in essence will eliminate the tax bill. So it's an amazing plan for you to keep wealth in your family with These real estate assets. So that's what 1031 change is and kind of why you should do it. And here it is, right? This is the timeline. And this is so important if you're looking to sell your rental properties or your investment properties to understand this timeline, there's not an opening for extensions, there's not wiggle room, there's not, oops, I missed my deadline. I'm going to go back and fix it. There's none of that here. If you miss these deadlines, your exchange will be null and void. So it's critical that we nail these things. So the process, very simply from a high level is one, sell your property. Okay? Your proceeds from that property are going to go to this third party group. They're called a QI or qualified intermediary. And I'll explain a little bit more about that in a second. After you sell your Property, you have 45 days from your close to identify properties that you may purchase or exchange into. So that's an identification form that you'll get and I'll describe how we would fill that out and what you need to put on there. But it's critical you have to do that on the 45th day. Otherwise we're done, this exchange is over. Unfortunately, I have people that call me all the time and miss this deadline. I have people call me all the time and they have a check in their hand. They didn't use a qualified intermediary. We're done. There's nothing that we can do at that point. It's all over. So it's critical that we hit that. And then the final timeline there is I 180 days from close of your, of the selling of your prior property. You have to close on those replacement properties. Again, not flexible. You have to absolutely do that is to sell that. So that's the timeline from a high level. And I'll break out each one of these pieces so you can understand what you would need to do in the exchange. So here's the basic rules of 1031. So first is the qualified Houston requirement. So what does that mean? So you must have the intent to hold the relinquishment replacement properties for investment purposes or use in a business. So the immediate question I get is, hey, I'm a flipper. I flip houses, right? Something that is very popular in my Marketplace. Can I 1031 exchange that? The answer is no, because your intent isn't to hold that for investment purposes. Your intent is to sell. Your intent is to fix and sell. Can't do that. Now, intent is very broadly construed. Here's where a great CPA comes in handy, Right. To make you understand what that intent and qualified use requirement is. Right. So that is a gray area. There are Items here in 1031 Exchange that are absolute, like the timeline. There are items like the qualified use requirement or the holding period requirement. I'll describe next. These are gray areas. There is nothing in the law that indicates how long you have to hold that property as an investment property to do a 1031 exchange. It's not there. So what we see people recommend is usually hold it for at least 12 months in that state of intent of holding it as an investment property. That's what we hear very often. But again, it's not a rule in the law. So this really depends on you got to get tight with your CPA here. And the rules that they see and they want you to be executing on is absolutely critical. So those are some of the basic rules. And then finally at the bottom of this page is in this 1031 transaction, before you close, you absolutely have to have a qualified intermediary assigned to your sale and your purchase transactions before you close. It's very simple to do that. Qualified, intermediate, big word. What does that mean? This is a third party that will hold these funds for you and record this 1031 transactions. Absolutely critical. You have them and it's very easy to get one. The simplest thing I would do is call my title company as a starting point and say, hey, I want to do a 1031 exchange. Do you offer qualified intermediary services for that? Most title companies will do that work. If not, they will refer you to someone else that does. Okay, so that's part one. Or if that doesn't work with your title company, a quick Google search will help you find companies in this space that can help you. But it's critical then if you have that third party, to connect with your title company immediately and inform title company immediately you want to do the exchange. Got to do it. I thought I saw a question in the chat. Did I see that? Oh, you answered, Ray. Okay, good job. We'll move along. Right? So that's. These are the basics, right? At a very high level, this is where we see things kind of go wrong. So qi, critical. Get a qi. Do not call me and say, I have a check in my hand. That's a problem. That's a huge problem that we just can't fix. Here's some more terminology associated with 1031. So in a 1031 exchange. We have to do an exchange into. It has to be like kind property that we're exchanging into. What does that mean to have like kind property? So we broke out a list for you of things that you could potentially invest in. If you are holding real estate for investment purposes you want to sell, perform a 1031 exchange. What can you reinvest in? There's absolutely no reason. Get this question a lot. There's absolutely no reason that you can't own a commercial office and do a 1031 exchange into multifamily. There's no reason you can't do that. There's no reason you can't own a farm and buy vacant land. There's no reason you can't own an industrial building and buy a group of single family homes in exchange. No reason you can't do that. Is real estate broadly construed in this transaction is like kind. So all good. Everything you can do from that, that side is 1031 exchange eligible. So that's awesome. So we can switch between asset types and work along this list over here. What can't we exchange? Personal use assets. So your home not in 31 eligible. Sorry, secondary vacation homes. Nope. Right.

Won't work.

Securities, stocks and bonds, mutual funds and REITs. Not exchange eligible. Okay. Partnership and membership interest. And we'll get to this in a few different seconds. That means typical syndication structures because remember, in a syndication structure, what do you own? Do you own real estate? No. You own a portion of a partnership and partnership isn't eligible to exchange. So we'll get to a workaround for that in a bit. But think of this very broadly of all real estate really fits into this like kind requirement that you own directly. Things that are personal use or equity or partnerships. Those won't work in an exchange.

Yeah, I think the most interesting here is that oil and gas interest. Not many people know or realize that they could actually have that oil and gas investments that they can do too. So that's very interesting.

Yeah, this one's been an interesting one for us frankly as a firm is looking into mineral interest. And yeah, that works very similar to real estate in that way, but it's very hands off. So it feels more like triple net lease where you're getting paid on gross revenue to kind of do that transaction which I mean that's talk about hands off. That's hands off as it gets. So it's a real. That's an interesting. Another interesting passive option. Yeah, it is interesting that that, that is on the list. I'LL keep booking. I got about 100 slides. I'm kidding. I have 100 slides. I wouldn't want to make 100 slides. Another key point that I get all the time is this reinvestment requirement. So, so, for example, what our investors will say is that, hey, hey, I sold a building for a million dollars. I originally bought it for 300k. I'm ready to invest the 700k gain I have into a 1031 exchange. And I go, okay, that's nice. But if you want to defer the entire tax bill, you have to invest the 1 million, you have to reinvest 100% of the proceeds coming off the sale of that property. So it's not just the gain, it's all of it. If you want to defer now, there's absolutely no reason that in that scenario you can't sell a million dollar building and reinvest 700k. You can do that. You can do it. It's a partial exchange. You can do that. You would owe tax them a 300k. You'd be prorated tax on that. You can do that. We watch people do that all the time. If they need some liquidity out of that transaction, watch people do that, it's totally fine. But to defer all of the tax and all those benefits that we talked about before, you have to do all of it. Okay? So that's a big thing. Reinvestment requirement. Of course, with anything we have with the initiated by the irs, there's always more rules. Here's just a sampling of them. So this is one about selling expenses. So this is a good way to think about how to organize your closing statement before you get there. This is a really way to think about it. If I had to summarize sort of these two sides for a second, the side on the left, you think about things that are permissible. Selling expenses are really things associated with fees. If you're paying for a broker or an attorney or a CPA associated with the transaction, those would be permissible expenses. Things on the right associated with your mortgage or prorating any portion of the revenue associated with that property are actually non permissible. So very often we'll ask clients, they'll come to us a little later and they'll say, hey, I stole my property, I need to do something. And I'll say, great, let's take a look at the closing statement. And when I look at the closing statement, I will see some of these items in here that are non permissible. So the investor then has a decision. That non permissible portion can be looked at as what's referred to as boot or a partial exchange that would owe tax on that portion that is non permissible or they can bring more cash to the transaction to cover it. And so we'll watch people do that is cover up these non permissionable items by sending additional cash to their qualified intermediary so they don't have a tax bill that they're looking at at the end of the year. Does that kind of make sense? Do you want to add anything on that one?

No, I think that's perfect.

It's really interesting. So you gotta be very careful and overarching theme I haven't even said yet, and I usually say it's 10,000 times already, is like plan for this thing. Please, please, please, please don't think about this in parts. I think a lot of people do that. They think about, hey, I'm going to go sell my property. And that's a lot of work to do that. I get it. But you have to be thinking about the exchange in parallel or you have to be thinking about structuring the exchange and what I'm going to do next. Before you think about selling and starting to execute that process. It's critical because there's all these little items here in these tight timelines that you have to follow. It's great. You got to have this organized before you start. Entities also very important. Hey, can I sell? I have an LLC that my properties and I want to put it in a different llc. Can I do that? Sometimes depends. If it's a disregarded entity, you certainly could. If it's not, that's a problem. So the problems that we see are, hey, I own this building with three of my buddies in this combined LLC we have, but we're going to sell it and we all want to do something different afterwards. That's a problem. That's an entity change. You can't do that when you get to the 10:31 exchange. So there is a technique called a drop and swap. And this is really where you want to consult the CPA if you're looking to change entities and you want to do that in this transaction. Don't go and work with your CPA before you're thinking about selling and have them talk you through what's a good strategy to change this entity. The rules are different in every state about how you can do this and you really need that CPA to kind of walk you through that. So if it's something that you're thinking about if you're partner with people in an LLC or something of that nature or you want to change entities, it's very critical that, that you make that consultation. Okay. Oh, here's, here's the most fun slide up. Q and A. Did you answer this one too? All right, I'll do this one right now. Does it make a difference if the property is owned in a C corp and if you are in a syndication, does it still qualify? So I think there's a couple different questions, couple different questions there. If we're in a syndication and it depends on what type of investor you are in that syndication. So if you're a limited partner in that can't 1031 exchange partnerships. So then we're, we're out. What you own it in doesn't necessarily matter. So I'll take it in two parts. If you're in a syndication like I said and you're a limited partner in that syndication, can't do the 1031. What you own it in doesn't really matter. We watch people own property in corporations, in trusts, in llc, single owners. Doesn't matter what you own it and you can do the 1031 exchange. It's just important to be still be in that entity when you make that exchange. Hope that helps answer that question. We'll get to, we'll get to describing syndication here in a bit more detail after I get through the 1031 portion. Huge part here on 1031 exchange, the identification rules. So. Oh yep, it helped. Great. Awesome on that question.

Cool.

So identification rules we have, we have three identification rules that we can run with the vast majority of people that are identifying use the three property rule. And the three property rule means that on the identification form you can identify 1, 2, 3 properties. You have to have their address on there. It can't be something generic. It has to be very specific. You can identify three properties in that ID form and you can close on any number of them that you like. One, two or three. So it gives you the most flexibility in getting to that 45 day mark and then to the 180 day mark is using that three property rule. So watch most people use use that one. The second rule is the 200% rule. 200% rule says I can identify any number of properties that I want as long as it's less than 200% of the gross sales price of the property that I relinquished. So in that rule, that's a great rule for us. And what we're doing as we're building Portfolios for folks that are very diversified across many different assets. We'll use the 200% rule to do that. It's very efficient for us to use that. Most people use rules one or two. And then finally is rule three. Rule three says I can identify any amount of properties that I want. I have to close on 95% of the fair market value of those properties. So rarely, if ever, do you see this rule used. Because naturally, as I'm sure everyone knows on this call, if you're buying property outright, a lot of these numbers can change. A lot of things can happen when you're doing due diligence on those properties. And so you really gotta have super crossed T's and dotted I's to do the 95% rule. So most of the time, we're seeing folks use these first two rules to make an identification.

The 95% is kind of interesting because these days what's happening is people are, you know, the prices are soaring and the, you know, appraisals are coming back much lower than what the prices are. So do you see that posing a problem to that 95% exception?

Yeah, we just don't see people use it, especially when they're buying property. Especially when they're buying property outright. Let's take that off the table. Most, the vast majority of people that are buying property to. To manage or thinking about buying property, to manage this replacement, they're going with this three property rule. And so then you take that appraisal off the table of being an issue in that construct. So that's usually a good thing. But I was thinking about the conversation we were having offline. It's like people are trying to find 15 different properties to potentially to go invest in. Boy, you can't list 15. So it's not gonna work. It creates a huge problem in doing the exchange. So these rules are very. They're very restrictive. They make doing, frankly, they make doing an exchange very difficult. And so I'm going to pound on that drum again about you have to get organized before you sell about what you're looking to do next. It's so critical. And the people that we watch succeed in doing the exchange are people that are so well organized that they're selling one day and they're reinvesting proceeds and buying something else the next day. Those are the folks that are nailing it. Right? And I know it's really tough in the market to do that, but those are the folks that do really well, are ones that are organized. The ones that don't and we'll help these people. They call me on day 41, they're like, I'm stuck. I don't know what to do. We'll help you. But I'm sad that we've gotten to this point. We should have talked two, three months ago because this could have been a lot less stressful if we were well organized. And again, on top of that too, adding to the equation. It's absolutely critical to have a CPA involved in this action too, because we've gone through this very deep with clients before and we've gotten to the end and it's like, I don't even know what my gain is. Like, oh gosh, no, stop. Go back and talk to your cpa. And some of those instances, there's personal tax situation where there's nice offsets in their personal tax situation and they're like, I don't really need to do an exchange or I have a really smaller tax bill than I thought. So it's good to know what that scorecard is going to look like at the end of the year and figure out if you really need to do this or not. Again, pre planning.

A quick question here, Brandon. So if they don't know how much is their gain the next week, what we are going to count for all those calculation examples, when you do the sample study, would you be looking at calculating that capital gain of some of the properties and then going forward?

Yeah, we do have a calculator on our website that can at least provide you an estimate. Again, we're not CPAs, so we can at least provide an estimate of where you are so you can get a general sense of looking at where you are with that property in isolation. Just understand that. So, yeah, we would use that as a bit of a jumping off point to understand that and then work through, say, okay, I got a gain, let's go and do something about it. And then, yeah, the next step would be to work through those options.

Yeah. And understanding that how much gain you're going to have is so important because suddenly this part becomes more important, that why do you have to think about the exchange or saving on that capital gain? Because people simply sometimes think that, oh, it's just going to be whatever I purchased for and whatever I'm selling it for. But the whole depreciation recapture adds. I mean, some people think that, hey, I have not depreciated it, so there is no recapture. Well, it's. You lose it if you haven't done it, but you have to recapture it so, you know, that adds. It's at, what, 25% that you have to kind of add it back, something like that, right?

I believe so. I believe so. The actual calculation is, my understanding, is a little bit more complicated. Depreciation recapture. But you bring up a good point, and I've heard this from multiple CPAs, is even folks that don't take the depreciation when they get audited, they actually have to prove to the IRS that they didn't take the depreciation. Because the IRS is like, well, we expect you to take it. Why don't you take it? Right. So you literally have to prove to them that you didn't do something that you should have taken advantage of as a benefit of owning real estate. So it's just a route that you. That you just don't want to go down in trying to fight that for the irs, that you didn't actually take the depreciation and you don't owe it. But it depends on how good your CPA is. Maybe leave it up to them.

And I have seen. Hamid, you have hand raised. I just allowed you to talk. Do you want to ask any specific question here? Please, go ahead.

Oh, I apologize. I was playing with my son and I must have just hit the button. I apologize. I'm on my phone here.

No problem. Thank you. Yeah, please go ahead, Brenda.

Give me a chance to get a drink. Thanks, Aman.

Absolutely.

Or thanks, Aman's son. Thank you. Well, thank him for that. So that's really 1031. Again, it's a very high level. There's lots of details in there, but I wanted you to kind of walk away from there. Like, okay, I got a general sense of the timeline. I know what to do to not get in trouble. I know what to do to set this up properly. So I hope that was a good takeaway from that. So the next section I really wanted to talk about is there are solutions out there that go beyond investors buying another replacement property that they're managing. And so I'll talk. I'll talk a bit about Delaware Statutory Trust as an option. What the heck does Delaware Statutory Trust mean? I'll walk you through that in painstaking detail. And then I want to talk a little bit about, you know, how we can get into sort of the syndication world a little bit. And there's a possibility to do that, too, with a tenant and common structure. So these are options that, and we hear this a lot, are options that investors don't know about that are eligible through 1031. Exchange and they're really for folks that are looking at the market, I think in two ways. One, I don't really want to manage property anymore. That's one type of investor that we're seeing. The other type is saying to us, look, it is so hard to find replacement properly. I'm dying out here. What can I do to do the exchange? Take advantage of this market and maybe diversify myself or maybe get across multiple geographies, get different asset types. How can I do that? This is an option to sort of do that. So I'll start with Delaware Statutory Trust. It's sort of the easiest item to get into. And so what is a Delaware statutory trust? So it's a fancy name we put on this thing. In essence it's, it's big property syndication at the end of the day because you're a fractional owner of what feels like an institutional type property. So think about 50, 100 million, maybe larger, multifamily or self storage portfolio, et cetera, could be assets that might be in a Delaware statutory trust and you own a portion of that. This thing is custom made for 1031 exchange investors so that investors can really diversify themselves in here and really get passive. So I lined up some characteristics of DST over here for you to sort of think about and then I'll talk about each of these in detail. This truly is a passive asset. You don't have voting rights or control. It's more conservative in nature definitely than owning outright and direct the debts non recourse to you as the investor. So that's a good thing. So it really mirrors a little bit of what we see in a GPLP structure in that way that the debt's not coming back to you as recourse, bad stuff. There isn't liquidity in this and I'll describe that in detail. But what's great is there is a tax advantage here obviously in doing the 1031 exchange. But also in the eyes of the IRS, when you're a fractional owner of a DST, it's like you own real estate direct. You get the same benefits that you would if you bought the building down the street is if you own a portion of this as well. So that's what it is from, from a very, very high level. And then I want to break you out into some, some details first. And this is an advantage first and foremost. DST is not a reit. And I hear this all the time because it sounds like a REIT, it's not a REIT. Right. So a REIT. When I think about a REIT, a REIT's a blind pool of, you know, real estate that, I mean, I don't know, I've owned REITs before. I have absolutely no clue what's actually inside of them. That's not the case. Delaware Statutory Trust. So you know the property that you're investing in, you know where it's located, you know the address. There's no, there's no blind pool action there. So that's one. Most of the stuff in this space is of institutional quality and frankly the majority of its class A multifamily stuff that you're seeing. And there's a reason for that. It's the investors that I described showing up here that are looking for stability. They're looking for a conservative investment. They're really interested in deferring tax on their exchange and they're looking for things that have consistent cash flow. And I'm sure your listeners are thinking like, oh, it sounds like class A multifamily is kind of what fits that bill. And so that's what's in the space. It's not the only thing there. So we love the fact that there are multiple other investment types here as well. Self storage, there's industrial deals as well. Senior living, which we're such a huge fan of. So there's ways for you to diversify here across different property types and definitely across geographies as well. So that's a huge advantage. More advantages now get to what's bad too. So I won't pull punches on that either. Huge advantage here is to help us out on the timeline. So I described that timeline before and maybe you're thinking, hey, 45 days doesn't sound like it sounds like a long time. It's not. It goes extremely quickly and it's gone. So what's great here is a sponsor's already going to purchase this property and then offer it to investors. You're not waiting to close on a property here, they're waiting for you to send them their send your money. So when you close, these items are available for you. So it's eliminating for the most part a lot of the timing risk associated with 1031. So that's a very, very, very good thing. Again, as I talked about from a tax perspective, DST is like owning property outright. So you do have the ability to exchange here again and again. Do the proverbial swap till you drop strategy. You can do that. The stepped up basis is there, you can do that. So there's a Lot of options here. And it feels like owning real estate direct from that perspective. So that's a very, very good thing as well. Here's what's good or bad depending on your perspective. You have no control set. All the decisions about the how the property is managed is done by the sponsor of that particular deal, including when to sell. You don't get any to vote on anything either. So again, this depends on your perspective. So for some of my real estate investors that have been managing property for 30 years, when I say this to them, they get like hives on their neck. They're freaking out. They're like, I don't have control. Are you kidding me? I can't deal with that. And that's okay. Other people are like, I don't have control. Thank God. I'm so sick of having all the control make all these decisions. I just want to go on vacation. So it depends on your perspective here. But note that there's nothing for your free to do really. The work that you're going to do is up front to decide what deals you're going to invest in, what sponsors you're going to invest with. That's going to be your critical control point for you in this deal. It's not going to be on managing it. It's certainly not going to be on making any major decisions. Risk and return. So this is a really fun slide that I don't think a lot of folks would show. So there's what we see in DST consistently is conservative returns and conservative modeling. In pro formas there is risk because it's real estate and it's still real estate. So guess what? And no one's probably going to tell this to you to talk about this product. Some of these deals are going to go bad. They are gonna go bad. Right? And so this is a list of the last 20 years or so of some very big name sponsors and their spend their history of DST deals. What's awesome about DST is in the PPM and the offering documents you get to see the sponsor history. It's listed out deal by deal exactly how they did and where they did. And that's an awesome piece of information. So we picked that out of page like 300 in these huge offering docs and said all right, well let's turn that into something visual so we can understand this a little bit. And so these deals here that are underneath this zero line, they represent loss of capital. People lost capital in these deals. It's not cool, but it happens. It's real Estate. Right. Are there a lot more deals that are above that line? Absolutely, 100%. But we have to understand that even though that these are allegedly conservative and feel conservative or modeled that way, there is inherent risk to that. And so just give you a little more color on that. What we kind of found here is that a lot of these deals were in the retail sector. We saw very few in the multifamily sector. It actually had loss of principal. And so our takeaway from that is macroeconomic trends are going to affect and impact us anywhere. And it really doesn't matter what sort of wrapper we put it in. If it's DST or syndication or whatever we want to call it, can't beat those things. Right. So we see a lot of. There's a lot of retail in here that's gone negative and there's a lot of Amazon effect that sort of happening to those locations. Can't beat that. It's a steamroller. Right. And so we have to watch out for those things and we do that in our process. But the overarching theme I want to give you here is it's not all sunshine, rainbows and roses, right? I mean some of this stuff goes bad and we have to evaluate this accordingly like we would any other piece of real estate.

So while investing in the process wise, do you get to pick and choose where you're investing or is it kind of a blindfold in a way you can literally pick up where you want to invest. Right, the deal invest.

Yeah, absolutely, absolutely. So yeah, it's for us, I think the due diligence is two part and I think sponsor and deal are equally important and we look at them in the same sort of way. So we want to understand, does the sponsor know what they're doing in the space that they have a proven track record, results. Great. Now let's look at the deal. Where is that deal? What is that deal? Right. What are the demographics around say that apartment building? What's the absorption in that market? So we're going to go through that same sort of checklist I think anybody should go through when they're looking at real estate. But yes, you have to answer your question. Yeah, you have that optionality about what deal you want to invest in and where you want to invest in. You're constrained a little bit about what you're offered. So the DST market, like I explained, is a lot of class A multifamily. You may have an opinion, look at class A multifamily and say, look, the cap rates are too low, return patterns are too low. I'm not interested. That might be an outcome. So I mean, you're not going to see class C value add properties in here. It's just not an aspect of this marketplace. So you're constrained a little bit. But you know. Absolutely. You have a choice about what you're investing in.

And can people just go on like a website or something to view the list of properties just to get a perspective?

Yeah. Not to make this even more confusing than it is and maybe I get to this on one of these slides.

But if you have it coming up, I don't want to jump the gun.

Yeah, no, actually I do. I think it's worthwhile to jump the gun at this point. Yeah, so that's a good question. There isn't an up on marketplace for a couple different reasons. One, to invest in dst, you do need to be a qualified investor. So what does that mean? So it means that either one, you have a million dollars worth of assets less your home, or if you're married, you make 300k a year for the last 2 years and a reasonable expectation to make that again. If you're single, that number is 200k. So somebody that is me has to verify that, that you're accredited. And you can see these offerings. So you won't see even when you see, you can go Google this right now and a couple of our competitors will pop up like McKay Properties or Realize 1031, they'll offer you access to this portal, but they will want to verify those things first that you are accredited. So there's a way for you to kind of get, get a little bit of access to looking to those. But what's kind of weird in this space is you can't go directly to the companies that are sponsoring these deals because of the financial security. You need an intermediary like me, according to sec to kind of walk you through that and verify some of these things. So it gets a little, it gets a little tricky in trying to just see these things, which I think is annoying. So I'm going to start soapboxing here a little bit. If we want this marketplace to be bigger and to be a real resource for people, we need to remove some of these restrictions that are attached to it so people can see what the heck the stuff is better and easier access to it. So that's kind of silly. That's a great question.

Thank you.

I'll hop back a little bit, but then I'll. Then I'll keep moving debts non Recourse. So that's awesome. It's only recourse to the property. So in the absolute worst case scenario, you would lose all your capital. If Armageddon happens to this place, you're gonna, you're gonna lose your capital. No one's gonna come hunting at you to repay the loan, which I think is a pretty good thing. Liquidity is a problem and it's an item that, that we're working on in this marketplace, but we don't have a lot of good solutions yet. So it's a developing secondary market, but investors should expect to hold these items for 5 to 10 years. The average hold period is a little over 7, but you gotta expect that. And there's very little liquidity. If you need to get out, that's a problem. We'll find a way to do it. But you're going to take a haircut to do it. So it's really critical. And here's a good reason why we are involved, right? We're involved to start a little bit of a financial planning process with folks to say, okay, what is your liquidity situation? Let's walk through that and try to understand it. Because locking up a vast majority of your wealth for up to 10 years could be a problem for you. And we might want to do a partial exchange in that case. So just something to be aware of.

We have a question on this particular slide. Take that.

Yeah, I will. Why DSC sponsors allow for a secondary market, I don't know. I really would like one. I think it's a construct of two things. I think, one, the marketplace hasn't been that mature to allow itself for a secondary market. I think that's one. And two, I just think it's something that sponsors just aren't interested in doing. And it's kind of a weird for me to say that. I think it's vastly interesting to think about. If I was doing an exchange and I was on the side looking to invest in dst, it would be fascinating for me to think about, hey, I'd love to pick up one that's a few years old that somebody needs a liquidity exit in. I would love to provide that kind of liquidity in that, and vice versa. I think the people that would want to sell would like to have that liquidity. So I think there's the makings of a market here. I just don't think anyone's really done it and I don't think the market's been mature enough to handle it. But I think we're there Now. So, hey, if you want to take a run at it, we would be a huge supporter of anyone that would like to take a run in a secondary market. We'd love to take a run for that, but. But yeah, it could be hugely valuable. I just. I don't. I don't know. I have a really great answer. Why it's. Why it's there. Because. Yeah, I mean, I'm right in that. Mark to market. Yeah, there's. That would be great. I think it'd be an amazing thing to have better liquidity here, so I hope that helps. Oh, so be. Yeah. I don't know. I mean, that's, that's tough to say. Immediate drop of value in the dst. I'm not buying on that at all, to be honest with you. No way. So we've watched people make great returns in these things. I mean, you're gonna make better returns outright and owning real estate for sure, but people are making money here. So I don't know. That's. That's. It's kind of tough. So I'd love to see. I'd love to see some evidence of that. I just don't see it. Let's keep booking tax treatment. We kind of covered that. Easy to pass along, low minimums. I think that's a big, big aspect here too, is we're talking about 100k in most deals to get in. So that gives you a great ability to diversify. We love to watch people do that. DSTs as they currently stand are a closed structure. And what do I mean by that? So you can't refi these things right now. The treasury passed emergency rules last year due to Covid to allow some refinancing and we think this is on the horizon. I think it's pretty silly. You can't refi in these. If you bought a property outright, you could refi that the next day, but you can't a dst. It seems kind of silly. So we think something's coming there. There are mechanisms if there needs to be a refinance, there are mechanisms to get yourself out. It's a little bit more complicated for me to talk about, but just know that that's there. There are mechanisms to help if there needs to be a refi inside the structure of the agreement. What didn't I talk about and when to use dst. Time to retire. Mention that. Sick of managing properties. I get a lot of folks that just don't have time. They have these properties and time to manage them. It's a good Option works as a backup plan too. We talked about how crazy this market is. If you're going after a few properties outright. You're like, hey, I don't want to lose my exchange. Toss a DST on. That ID form at least can save you a little bit. And this works really well too for people who don't think about these options are people like business owners. So if you sell a business with real estate inside of it, that stuff's 1031 exchange eligible. And you should take a run at. You just take a run at doing it then through one exchange with part of your business sale. Farmers too. We watch farmers do a lot of 1031 exchanges into farms, come on into real estate. It's a tough business to manage. So that's an option as well. So that's DST really from. Really from a high level. Oh, there's huge fee structures here too. We should probably talk about that. So let's not get it twisted. There are fees here and this has been a lot of like hand wringing about on bigger pockets in those forms about how expensive these things are. So let's just talk about it. You know, upfront there's 7 to 9% fees. Some of that we're able to get refunded to our clients in forms of sales commissions. But that's a lot of money. You're paying someone to manage this property. We found about an average, a little over 3%. And they want. You're paying people to dispose of it as well. So good sponsors will only do that when you know they're making money for you. We see that the one and a half to 3%. Are these fees somewhat similar to what I see in. In syndication? Yeah, a little bit. Are they less? Absolutely. So there is a higher fee structure here to kind of facilitate these assets. It is what it is. It's a Dragon returns, no question about it. And it's a negative. So I mean, I'm not gonna sugarcoat that either. It's real. Now I'm done talking about dst. Let's go to syndication. So let's talk about syndication a little bit and I'll. I'll tell everybody a little story here. So probably about a year ago or so we started watching this construct of the market, not construct of the DST market not working for some of our investors. And I'll describe what I mean. So they're looking at all this class A multifamily. We're watching squeezing cap rates. It's putting pressure on economics and our investors. Some of our investors are looking at us and saying, you know what? I want a little bit more in economics, and I might want a little bit more control, too. How can we do that? And, you know, sort of the answer for us is to start looking at the syndication space. But we ran into problems immediately. And so the slides into why your favorite syndicator doesn't take 1031 money. And we asked, we asked a simple question of a lot of syndicators that are really good. We asked them, do you take 1031 money? And we got a pretty simple answer is, no, we don't. So we engaged with a bunch of sponsors that did that, and they said, no, we don't want to do that. And there's a variety of reasons why folks didn't want to do that. One, the structure is not the same as the way they're usually raising money. So you watch, most indicators are raising money at GPLP structure, general partner, limited partner structure. They love it when. And this makes a lot of sense. It's the same thing as a dst. Love it when you show up with your capital, love to pay you a return. But we want to manage this thing and be in control. And so if you take in 1031 money, you really can't. You really can't do that. But we kind of looked at this and said, there's so much 1031 money in this space. Like, well, why. Why isn't this. Why isn't this happening? And so it's hard. So it's not only a preference of structure, it's hard to structure an alternative way to go about this. It's not easy. It takes the engagement of lawyers, it takes the work of building relationships among syndicators and investors. It's hard. It's not as easy as raising money through a GPLP structure. So, like I said, you're not structured. Take it that way. Gplp, we can't just can't do that. So we need, we need direct ownership for 1031. And obviously, I'm skipping those slides. There is an alternative. So obviously we've watched some syndicators actually build their own VSTs, which we think is kind of interesting, but it's really expensive. A lot of legal fees associated with that. 10 In Commons, the way to go, though, so. Or referred to as a tic. And these used to be really popular before DSTS came into play in 2004. 10 in common used to be a very popular structure. And we think they could be again in the syndication space if structured properly. And Providing people with the proper rights. Some sponsors have said yes to doing that. So we think it's kind of, kind of interesting to think about it. But in a tic structure and how it's different from GPLP is in a tic, you have voting rights, you're staying alongside that GP layer, not that limited partner layer. You're staying alongside those managers and you're making decisions with them. And they're bigger decisions, not small decisions about how to run the property and where to set rents, but big decisions about when to sell. In many tech structures, you have the right to potentially vote out the manager, which would make any syndicator very nervous. It'd make me nervous too. So it's rarely incumbent that syndicators and as they're looking at this tick structure to sort of think about, okay, there's a lot of time, 31 money, how can I access this tic is a way to do it. How should I function and operate within that business? Right, so we watch a lot of minimum investments that are closer to a million dollars, million dollars from the investor to the tick as a starting point. So obviously that's really different than thinking about 100k in the DST. It's a big commitment. And so that's something that we're working on too. Financing is a big point too. So in a lot of tic structures, the financiers will be looking at those tick investors. They'll be looking beyond just the general partners into the tick investors and they may want them on the loan. So there's recourse financing here. That's an aspect that again is something that we're trying to work on in this space to make this debt non recourse. But it could be a problem. And then obviously the voting rights could give, could give syndicators some heartburn in thinking about what that means. But we watched this be successful when there's, you know, a limited amount of investors that come to the table to form the tick and gain really tight and comfortable relationships with syndicators. We've watched this work really well where you can kind of take that the level where, you know, you're buying buildings here, but now this influx of 1031 capital, I can jump up here into the marketplace and buy something a lot bigger. So I think that's the plain advantage for, for syndicators and obviously the advantage here for the investor is you get more of a customized deal. So if you're like, hey, I want to look at something that it's a little bit risky and has a little bit more economics attached to it too, and maybe more debt. I mean, this is the place you could go to. It would make a lot of sense for you, say, hey, I like class C. I like classy value add. It's the only place you can get it and get it in a meaningful way. So in the last point, there is really around fit. So we're looking for fits between. It's really between investors and syndicators. We all got to be on the same page about what you're looking to do and how you're looking to pursue. Once we make that happen, it's great partnerships. And you're often running on making economics for, for the investor and for the syndicator. So that's sort of where we are in this. It's, it's an evolving process we want to make. We want to make this easier for syndicators and investors to operate with 1031 exchange money. And so we're doing that. So we've engaged a variety of different lawyers to help help us work on agreements and structures that will make this feel more like DST and make it easier to use for 1031. But we got a long ways to go.

So a couple of questions here, Brandon. Great, great explanation by the way. You know, thank you so much for, for doing that. A lot of our, you know, viewers today are interested in the syndicated, you know, the tick especially. So the couple of questions. Have you seen some kind of middle ground when it comes to the voting rights? Right. In terms of syndication team, the best scenario is that the syndication team comes with that subject matter expert. So that's why they can take that more meaningful decisions about the property, which is supported by their experience, supported by the expertise that they have. If the investor who's doing a 1031 exchange, especially coming from something from a single family or land or something else, does not have any multifamily experience, cannot provide so much of expertise in that voting. So have you seen in implementing this tic that there is some middle ground, that these are the defined set of things that partner can do or cannot do, or it just essentially that works on how they integrate together with each other?

Yeah, it's more of the latter point because the tick structure is forcing us to allow that investor to have those certain rights they have to inside of that structure. So it's not frankly, would our investors like this structure to look more like a DST where they truly are passive? Absolutely. But I think the fear on the other side of the table from the syndicator perspective is, I don't want to give these people rights to tell me when to sell this thing and they can vote. I don't wanna do that. Our investors have no desire to do that. So they wanna rely on syndicators like yourself that have the expertise to tell us when it makes sense to do this value add or when it makes sense to sell in this marketplace. They want that. I think the disconnect is we can't really put it on paper. Right. And so that's where fit becomes this huge thing of can each side of the table get comfortable with our investor intentions beyond what's in the agreement? Then we're in a pretty good place to do that. If not, then we sort of have a problem. But it's a construct of the way the tick is and the rights that the investor has to have in that structure that's really kind of holding us back. And that's where we're kind of trying to think about what could. And again, we're really spitballing some of these things of what could be creative in the financing that says something like, yes, we will make this loan to this investment. If so, and so is the manager. If so, and so is removed as the manager, then that null avoids the loan. Right. So you can. We believe that you can. Outside of this, I can't make an agreement between investor and syndicator that way, but a third party could come in and kind of draw some of these lines for us where we would have an agreement that makes sense. We think that might be a viable option for this just to make everybody feel better. But in the meantime, it's really going to come down to fit. I mean, and I think it's kind of critical having to toot our own horn, but it's critical having someone like us in the equation to kind of smooth that relationship out and say, hey, look, investors that are coming to our desk are looking to be passive. They're not looking to be active. So they're desperate to have you make those decisions. So please do that. So it's really essential for us to kind of prime that pump a little bit and to set those expectations before we even have a conversation about a deal and a tick structure about what they're looking for and what they can expect.

Great, great answer. Thank you so much. Another question is, I'm looking at a lot of lawyer conversation and lawyer kind of, you know, coming in picture. So what is that cost that, you know, is it really high cost and who bears that cost? Is that you Know, the whole syndication bears it or the person who's bringing in the ticket, he bears it. So could you enlighten us on that front?

Yeah, I mean, not to not give a direct answer, but it varies in what we see. Yes, there's going to be an additional cost to working with lawyers to kind of construct this. We've taken a couple different exhales from hours of conversation. We've taken a couple different routes on this. So we've worked with lawyers to formulate sort of boilerplate agreements that a syndicator could pick up and have that be a starting point for their lawyers. I think that's helpful. We don't want to tell you what kind of agreement to make and never would we do that. But just to have a starting point, if someone comes to our desk as a syndicator and says, hey, I don't even, I've never done a tick before, it's like, okay, well we can help out a little bit in providing some, at least some places to start from and at least providing you a resource from a lawyer perspective to start working at. Like we can do the my lawyers, talk to your lawyers thing and that, that's usually kind of helpful. But there certainly is a cost to doing this. I don't think it's so prohibitive that the DST cost is like here, if you wanted to build that structure and the restrictions are like here, if you want to build that structure, the tick cost is probably like here. Right. And there's less restrictions around doing that.

So that's good to know.

Yeah, it's, it's, it's really, I think the hang up is really the construct of the agreement and who has control is really what, what makes people kind of, and by people I mean syndication syndicators sort of nervous.

Yeah, yeah, makes sense. And my last question before we, we go to this, you know, comment that he had made the last question is that in terms of 1031, it's pretty straightforward. Right. How much ever you sell, you just have to invest, you know, you have to have the property of same value going in. Right. What about in terms of DST as well as syndication, how much amount? Because if say I, I, you know, somebody sells a property for 400k or in half a million, that's not how much money that they have in hand because they have to return something to the mortgage or you know, have those expenses, what is that minimum that they have to bring in in terms of DST as well as in terms of syndication to be able to make that legal, you know, the exchange?

Yeah. So I think I had a couple different questions there. So on. On minimums, was it on minimums or on. On the recreation of debt and equity?

Well, yeah, I mean it's. Suppose It's a 500k house which may be purchased at 200k with 100k left in, in a mortgage, something like that.

Yeah. So in, in that scenario, and I probably didn't cover that very well. So in that scenario, what, what we really need to do is recreate the equity and debt position that you were in prior needs to be recreated in your next investment. So that means you do need to have a mortgage on that next one and you kind of need to match those LTVs or go higher. The IRS doesn't care if you take on more debt or if you buy more property or if you bring cash to the exchange. But it has to be higher, not less. If it's less, then there is going to be some taxable boot on that transaction. So what we see in the DST space is most DST offerings have between 50 and 60% LTV on them to accommodate exactly that. And that's kind of very fitting to the investors coming to the space of how much debt they have, so they can recreate that position and it's kind.

Of in terms of how much they are bringing in. So they're prorated kind of the loan on that particular property has to be in the same ballpark.

The same or higher.

Same or higher.

Yeah. Someone comes to me and they have, let's run that scenario again. Like they sell a property for a million and they have 500k in debt on it.

Right.

They have 50% LTV. Then I'm looking for something with at least 50% LTV, probably 60. After they're paying some of those expenses, closing costs, et cetera, they're probably going to need a little bit more debt. You can always though, as a substitute to that, bring cash to the transaction too.

I see.

We'll watch people do that to kind of pay down that debt. You can do that after your sale and it still works for an exchange.

So then in syndication, I mean the tick world, that must be a difficult step because, you know, the LTV is not that, you know, high of a ratio.

Depends. I mean, I've seen a lot of, frankly seen a lot of tick deals lately that have 70, 75% LTV is attached to them. Think of them what you may, but I do see quite a bit of that and I also see like, so we spin this as options for investors that have a significant amount of capital to take a look at this because I would want them to sit with someone like you and say, hey, here's my situation. I have enough money to do frankly maybe the entire deal. As a tic investor, can we structure a loan in a certain way that that helps satisfy this 1031 exchange?

So if they have like a 50% LTV, they can go to a 75%. That's allowed. Okay. That means.

Absolutely, absolutely. But if they wanted to go to 25%, then it's.

Yeah, that's probably in its indication world it's higher. So that's kind of, you know, takes care of it.

Right.

So yeah, we had a comment here. This option is quite exciting. I found quite a few sponsors who are okay with TIC as long as the amount is higher than a million. Yeah, we have quite a few smaller investment which we would like to roll into a bigger position. So we have to try a portfolio sell, but not. That's not optimal. So yeah, definitely. I mean, Brandon could, could help you with that. And you have seen a million dollar kind of a minimum for a tick agreement, right?

Yeah, this is, this is one of the items that we're fighting this a bit. Minimum seems arbitrary to us in terms of a tick investment. So I guess quick advice for that would be to kind of challenge that, maybe challenge that minimum a little bit or try to understand a little bit more, you know, why that minimum sort of exists and see what you might be able to do there to kind of lower that. That'd be one option. Yeah, I agree. The portfolio sale probably isn't ideal, especially in this environment. Splitting those up would probably be a much, much better spot to sort of be in. That makes it a little bit tough, but yeah, I mean it's something that we're, it's something that we're working on to try and understand. I get why it's a million dollars. I mean, what syndicators are, I think are trying to do there is frankly limit the amount of tick investors that they have. Because it's just, it's a hassle to have a lot of cooks in the kitchen. That's a very tough place to be. Especially if they are a little bit more active and aren't passive. I think it kind of comes down back to sort of that what I talked about with fit and gaining that big understanding of, hey, I want to be passive in this. I'm not interested in firing you as a manager. I want your expertise and that's what, frankly, I want to pay for and doing the syndication, let's not be as concerned about that. So I encourage, I'd encourage that. That question asker maybe just challenge the folks he's talking to and see what, and see what he can. See what he can do.

Yeah. If you need any help from Brandon, I've just launched the poll. Just, you know, answer if you need some help from him, and we'll, you know, get you connected and get you started. And like Brandon said, it's a lot to do with planning. You just need to start thinking ahead. So go ahead and pop your answer, please. Go ahead, Brandon.

No, that's good. It was just another. There's another comment on that. Yeah, and I'm, Yeah, it's. My response is on the smaller amounts. I'm just my, my answer, and it's probably too convoluted, is I would just push back on whoever you're talking to for the million dollars and ask why, why not 500k? Just kind of go after, go after it that way to try and understand that. Because we've kind of pulled that apart from syndicators. Why it's a million. There's no reason it couldn't be 500k.

Yep. Thank you.

We do the same thing on DST, too. Some people come to us at less than 100k and we go and ask sponsors of DST Go, yeah, that's funny.

Yeah.

I just may not be. Might not be big enough for them to care. That might be an. Might be a problem too. Yeah, that's a different issue. That's an issue we might be able to help with from our desk is I think we're big enough to care, regardless.

For those who can't see, the question, we saying that, no, they don't really care. Ghosting is the right word.

It's true. And I think that it's part of what we're able to do. I mean, we're able to walk up to DST sponsors. They don't like this, but they'll do it. The minimums are 100k. And I'm like, hey, you know, our clients got, got 80k. Can we do 80? And if. Fine, fine, do it right. And I think it's because we, you know, we're, we're placing, we're placing a decent amount of capital every year. So it, it, it's helpful. Yeah, it's hard when you're walking up there with a certain amount of cash and kind of get pushed back on that. I think Haman made a Comment there. Cost related is a reason. Yeah, I think a little bit of that, too. And that's, that's some of what I talked about that we're working on with, with syndicators a little bit is to, you know, in some cases we would. I would consider bearing some of that cost on our end to make these easier. In some cases, I think we've done a lot of the work already to kind of beat down the cost. So we're working on that. That's. That's a real thing that I think we can actually work on as opposed to maybe some of these stigmas that I think we hear about doing transactions in this way or lack of a. Lack of wanting to do a transaction that way. So that. That's something we can work on. But yeah, I think that's real too. From Haman. Oh, my gosh, that's hilarious.

You want to just read it right that hour?

Oh, my God, that's so funny. That's. Yeah. Well, I'm glad you like me. There's the end. And to be very straightforward, I don't, I don't necessarily disagree with you on the cost factor. We've sort of Ltd. The DST sponsors. We've done business with ones that have a lower fee structure and are willing to go after better deals and provide better deals for investors. We throw a lot of stuff out. And so I don't. It's hard for me to holistically disagree with the commentary.

Yeah. The due diligence is so important, right?

Yeah. And it's. It would be easier in my seat to just. To just show everybody that, hey, here's all the deals in the marketplace. Here you go. It would be easier for us to do that. We don't do that.

Perfect. Yeah, let's. I really appreciate everyone. You staying in a little bit late. And Brandon, you to. We still have a few more slides to cover.

I don't think I have anything else besides sort of what we do is as next steps. And the first thing I'd want people to do is, if I think they're interested in, is reach out to you. Correct. I think that would be a great place to start. But we'll take all our folks through sponsored deep dives and due diligence, show them our research on folks, and then help you coordinate all these parties. And to do this transaction, we'll stand on top of the transaction for you, make sure things are getting done right so we're not tripping up any, any rules for 1031. We'll help in doing that. But yeah, the due diligence is sort of where we add the most value.

Yeah, absolutely. And thank you so much everyone who has, you know, provided the interest that you would like to actually know about this and take it further with Brandon. So we'll get that, get you guys connected and you know, we can take it from there. And if you have any more questions, if these are complex topic, please type it in Q and A or chat. This is your last chance and we will take those questions, try to answer and don't forget to join us next week at the same time because we are not only just discussing these strategies but we are actually jumping into the live exercise. So we will have some examples and if you want your example to be explained here, we are taking that up. Just send me an email and just be here next week, same time. Any more questions? Last call.

Yeah, I'd love to have those beforehand but if not we can always do them on the fly. Sure, yeah, beforehand would be great.

Yeah, just send me an email info at think outside the stocks.com with your case and we will just take it up as an example. So anyway, don't look like we have any more questions. So thank you so much everyone for joining in today and thank you so much Brandon, so much value, so much, you know, in depth information about this complex topics. We covered a lot today, a lot of information. I really appreciate you being here and I really, really look forward to next week as well.

No, thank you so much. It's a ton of fun, great questions and yeah, we look, we look forward to fun with Excel next week.

Absolutely. Thank you so much.

All right, thanks. Take care.