Sign Delaware Banking Medical History Fast

Industry sign banking delaware medical history fast

today on go ahead ask what is a delaware statutory trust and how could it help you with your 1031 exchange transaction let's unravel that mystery on go ahead ask building wealth in real estate let the exeter group take the mystery out of how it's done on go ahead ask welcome to go ahead ask podcast by the exeter group where we unravel the mystery of investment real estate to provide investors with better quality information so they can make better informed investment decisions today your host will be myself bill exeter ceo of exeter 1031 exchange services and lauren spidell regional manager of exeter 1031 exchange services exeter 1031 exchange is a qualified intermediary or accommodator and administers all types of 1031 exchanges in all 50 states also part of the family of companies is exeter trust company exeter trust company serves as custodian for self-directed iras as trustee for title holding trust or land trust as escrow agent for specialty holding escrows and as custodian for custody services we always encourage questions and topics here at go ahead and ask so please send your topics questions or even if you want to appear on go ahead and ask to ask at exeterco.com or you can call us at area code 619 239 three zero nine one do you love go ahead ask if you do like it subscribe to it and share with all your friends and family today the podcast is entitled unraveling the mystery of delaware's statutory trust finding and identifying like replacement property as part of a 1031 exchange as you probably know can be extremely difficult especially in markets like we have today where there's tight inventory bidding wars and multiple offers today with our on our podcast we have a guest daniel rob of co-founder and managing partner of fortitude investment group security is offered through concord investment services llc cis member finra sipc advisory services offered through concord asset management llc cam and sec registered investment advisor insurance through concord insurance agency inc cia fortitude investment group llc is independent of cis cam and cia all of whom are independent of exeter so daniel welcome to the podcast we're so glad to have you on board thank you bill i appreciate it and thank you for having me you're welcome uh tell us a little bit about your background and also the the company fortitude investment group sure i appreciate it so uh i am a co-founder and managing partner of fortitude investment group and founder of 1031dst.com where we really have a wealth of information online i head up the company's investment practice with a particular focus on real estate private equity we work with high net worth real estate owners across the country helping them with tax efficient investment vehicles whether that is a delaware statutory trust or other types of investments that we offer here i began my career at nations bank and bank of america in charlotte north carolina at the headquarters and uh transitioned over a period of time in 1999 to getting involved with individual investment advisory work with high net worth investors thank you so much dan um we're really looking forward to our conversation today i just have a couple questions for you we like to ask our guests questions that can connect you with our audience so we'd love to hear about what you like to do for fun or something that you're passionate about so away from real estate and you know just doing deals because i really just love doing deals i like very solution based i love coming up with creative opportunities to solve uh solve investment problems um away from that i like playing tennis i enjoy playing tennis that's the uh that's the workout i love skiing um i have four beautiful daughters and a lovely wife and uh a house full of pets different animals that they they each love and adore uh and that i've grown to love i'm that guy that kind of plays keep them away from me but really secretly i love the animals so that's out of the bag i love that sounds like you have your hands full i do what would be some recommended books podcasts or movies that you would recommend for our listeners something that maybe you just can't stop thinking about or talking about um the power of habit by charles duhigg uh i appreciate that book it's pretty amazing if you can get yourself into a proper routine and i think you could speak to that across all industries um and or you know whatever whatever you're trying to um change in your life habits extremely powerful so i would recommend that my daughter's for christmas bought me a book that's kind of a work life balance book it's uh do nothing and that's by uh celeste headley so do nothing by celeste headley is another one i think it's important because you got to recharge your batteries um i'm sure bill would agree when when you're spearheading a business and you're just running after it going after it a thousand miles an hour and trying to be um trying to stroke uh trying to show strength for uh both your employees that are following you your partners that are following you and of course your clients as well it's it's important to take a step back and and and spend time on the things that do give you that energy to drive the bus that's great and it probably has a lot of benefit for our listeners who maybe have a a nine to five work at home schedule but never leaving work right now due to the current environment it's definitely hard to break away yeah and right now i mean people in positions that were nine to five are no longer because there's a window into their world 24 7. now i've i i remember a time when the blackberry was introduced and it's the first time that email ever came into my home and i remember turning to my wife as soon as i set it up and and had the email on my phone i said my life has just changed forever and it's it's a benefit and a curse because you can't the amount of efficiency and the hours that you can get into working are awesome great for productivity but horrible for uh mental health if you don't learn to balance it and shut it off you can't have uh 24 7 work at all times unless you can turn it off i should i should say you can't have healthy work and life balance unless you can learn to put it aside a little bit great comments who are some people we should chat with on future podcasts or a topic that you believe would be beneficial to our listeners i think the disparity between the price of real estate and the price in which you can borrow money at is a pretty interesting environment we're in a lot of people are are paused to do a transaction because they know that there's a lot of turmoil in the economy there's a lot of things going on globally and they feel like real estate's at all-time highs stocks and bonds are at all-time highs at some point the bottom is going to fall out um they're looking and saying but i'm never going to have access to such inexpensive money so what do i do what's the right is there a margin is there a specific formula i should be using so i think bringing an expert on on evaluation real estate evaluation would be a great topic now let's unravel the mystery of delaware statutory trusts so if you are a new listener you may not understand the idea of like-kind property when you're doing a 1031 exchange you may hear the term like kind exchanges or is my property like kind and like kind means that any type of real property qualifies for an exchange as long as you had the intent to hold that property for investment purposes so what falls into like kind some very well-known pieces of real estate would be single-family home multi-family commercial office industrial warehouse vacant lots even mineral and gas interest air and water rights but also delaware statutory trusts so if you could just comment on what is a delaware statutory trust thank you lauren so a delaware statutory trust or also known as a dst falls under irc 2004-86 of those of you that like looking up the actual codes and very easy to understand it's an entity it's a trust structure that has deeded ownership to institutional quality real estate that you are able to take the proceeds of your real estate transaction and purchase an undivided fractional interest of that trust structure and therefore whatever percentage interest you own of the trust you own of the building that's held inside of that trust now because they come in all shapes and sizes there could be a 400 unit garden style apartment complex held in one of these dsts there could be a couple 400 or a few 400 unit garden style apartment complexes in the same state or different states so you can have multiple assets in one dst they also come as triple net lease properties so your corner drug stores um large distribution centers we're also seeing them in hospitality there's been hotels not lately because of the covet environment but there were hospitality deals there are storage facilities really you name it it runs the gamut even mineral rights wind up in structures like this that qualify for 1031 exchange and when investors are talking to us they often kind of are i probably have never heard the term delaware statutory trust before and so one of the questions is why should i buy one and how would you respond to that when the client's kind of looking at that question sure well provided the client's an accredited investor which uh to be an accredited investor you have to have at least a one million dollar net worth or earn at least two hundred thousand dollars a year in the previous two years and a reasonable expectation you're gonna make it in the same year if your joint it's three hundred thousand for the previous two years and three hundred for the current year you're in once you're qualified for the dst some of the advantages to you might be it's a passive investment so you're no longer an active landlord so you get to retire from the things you don't like doing the stresses of being a landlord you've got a professional management team that you get to vet out you get to look at how is their performance before you decide to invest in the vehicle each delaware statutory trust is sold as a private placement and is accompanied with a private placement memorandum which shares all of the risks and rewards in it there's no such thing as a capital call in a dst so once you invest in a dst the sponsor the multi-billion or trillion dollar real estate company that built these products and that fortitude investment group we are not a sponsor we don't build these products we work with every single company out there that builds the dsts and we hire two third-party companies to do the due diligence rip the deals apart and decide whether they're likely to work out the way that the sponsor is stating them to and then once we get to see it we run our own due diligence and once we decide that it's within our risk parameters we we approve it and put it on our menu but where i was going is the capital calls if there is an unforeseen circumstance there is a reserve account within a dst that covers and what would be an unforeseen circumstance it would be a insurance deductible a hurricane hit so they can't come back to you and ask you to pay to play or put up money to stay in the investment which is an advantage you also have pre-existing non-recourse debt inside of delaware statutory trusts which is advantageous for a couple of different types of clients could be for a client that has a mortgage that they need to replace because keep in mind when you do sell you've got to replace both debt and equity the entire sale price of the relinquished property needs to be replaced so these have pre-existing debt doesn't show up on your credit you don't have to be underwritten for it but you get the tax advantages of the debt we can customize a portfolio so because they come in all shapes and sizes you're getting layers of diversification you can have different investment companies you're invested in different sectors of real estate and different geographical locations so something in texas something in florida something in in tennessee it really is across the country the dst provides liability protection so sometimes it's uh overlap you may not need we don't give tax advice or legal advice but you may not need that llc so talk to your attorney about that um you can 10 31 exchange out of a dst so later on in the future when you're looking to do another exchange you get to swap out and do it again and we can take all shapes and size transactions so if you did a million dollar transaction and you found a 900 000 replacement property we can help you on the 100 000 remainder by buying a dst investment because the minimums usually are 100 000 this episode is sponsored by our sister company exeter trust company did you know that all individual retirement accounts are self-directed iras it's because you choose where to put them you choose whether to put your self-directed ira at a bank or at a securities or brokerage firm or a life insurance company so that makes itself directed but did you also know that all ira custodians are not created equal most ira custodians like the banks the securities firms and the life insurance companies limit you to publicly traded investments such as stocks and bonds and mutual funds but some ira custodians like exeter trust company allow investors to invest their ira funds in other alternative assets such as real estate investors can acquire real estate mortgages deeds of trust or tax lien certificates inside the ira as an investment inside the ira to learn more call exeter trust company at area code 307-222-8750 or visit them on the internet at exetertrustcompany.net now let's expand upon delaware statutory trusts what would you say are the benefits of a delaware statutory trust so lauren one of the things we've already touched about touched on is diversification so diversification is key um i'm a firm believer it's not going to be the things that you and i don't know that are going to hurt us it's going to be the things that we're 100 positive about and wind up being wrong so that means did we put all our eggs in that basket that we were so certain about and then it winds up blowing up on us so we really stress being able to spread out that risk so having low minimums in these types of products gives you the availability to buy several different high quality assets we really stress diversification and then also there is a tremendous amount of due diligence that goes in to each one of these transactions so you have the sponsor the real estate company with a proven track record that digs into the deal approves the deal that's the property we have a legal firm that rips the private placement memorandum apart make sure that things are fair there's loads there's costs on these investments you want to make sure that these loads that these hurdles that the sponsor or the piece of real estate has to overcome are attainable because if you start in the hole as an investor it might be very very difficult for you in the future to get a return of your principal or a return on your principal so both are very important there's a lot of tax efficiencies with these for example if you sold a million dollar property all cash you had no debt to replace and you invested it in a delaware statutory trust that was 50 percent leveraged you've now bought two million dollars worth of real estate so you've increased your cost basis using non-recourse debt and now you get to depreciate more real estate against the income you're receiving off that dst portfolio that's another potential advantage that you'd receive off levering up keep in mind if next time around you're gonna do another 1031 exchange you now have to buy or replace at least two million dollars worth of real estate so it goes both ways you have to know what you're getting into which i think is the other advantage and benefit of dst investing is disclosure i'm going to be attached to these investments with my clients for the entire life cycle of the investment meaning from the day that they invest until the day they get out which usually by prospectus is going to be anywhere from five to ten years historically they are illiquid products you do not buy into a dst if you know you're going to want to get early get out early okay not liquid you want t buy into it with the intention of staying in it for the life cycle of the program which probably bleeds me into your next question lauren so i'm going to pause there and actually i was going to kind of bring up a repeat a couple of things you mentioned that really help clients in our in our world one is debt you know a lot of times you get clients who are trying to sell do a 1031 exchange and maybe they're self-employed or retired or they have no earned income or what have you and they get in the middle of their 1031 exchange and find out they can't qualify for financing and what you had mentioned is dead on where they can go to the dst and not have to qualify for that financing so that could really solve that problem when they find out they can't qualify they can't actually do that with the dst and then the other point you mentioned is a lot of times in the clients will find property they want they buy it there's a little sliver of cash left and historically going way back they'd have to recognize and pay tax on that where today they can at least take whatever's left and like you said buy into a dst and now it's all tax deferred so that's fantastic so we've talked about kind of the benefits uh perhaps you can touch upon what some of the disadvantages are of the delaware statutory trust so bill some of the potential risks of dsts that you're going to see and i want to reiterate is illiquidity so an investor going into a dst has to go into it with the intention of staying in it for the life cycle of the program which by prospectus is usually somewhere between five to ten years you don't want to go into this thinking that you're going to be pulling cash out of it early they do sometimes sell early if a deal comes in an offer comes in that's too good to be true the sponsor will likely accept that offer if they can hit their goals early and get a return a capital gain back to investors that the investor at that point would have the option a 1031 exchange and defer that gain again or pay the taxes at that time but just want to stress you do not want to get into a delaware statutory trust with the intention of selling out early if you did have a unique situation and you needed to get out early some or all of your interest in the dst you'd contact the sponsor we could help you with that and they would see what they can do but there's no guarantees of getting out of that investment you do not have control of the investment it's truly a passive investment you have all of the same risks as direct real estate investing declining market values loss of potential income you have to be an accredited investor to participate and purchase a dst so you have again just to go go into it if you have a declining real estate market the investment has the potential of loss of principle what you're going into with the comfort of is that you've got a proven sponsor that has a track record that has relationships and they could uh potentially weather a storm better than your individual investment and then by spreading the risk you set yourself up for a little bit more a little less risk by using that diversification strategy that we stressed on earlier and then the other risk that i do want to highlight on again is if you do take on more debt so if you increase which is a strategy many people are are using right now for a couple different reasons one reason is there's been a lot of talk of the threat of loss of 1031 exchange which i'm sure is another podcast bill you work on as well um so people are going out there and they're trying to buy up so this way they have more depreciable real estate god forbid that we did lose 1031 exchange they have at least tax shelter unless we lose depreciation too which um then we'll have plenty more to talk about bill because we're going to have a lot more time but i i think i've covered majority of the risks there and i think something that wasn't discussed earlier regarding advantages i know just from our side being in a qi being a qi there's definitely times where people call and they're concerned about finding that replacement property on time you've got 45 days to identify you know day 40 we might get a phone call from someone saying i'm not finding anything but i need to do this exchange a dst can be a great option for someone because dan as you know you've probably got a lot on your shelf that you can review with these investors and all the due diligence has already been done so a lot of that has already been taken care of that's right it's a pre-packaged product and at any given time we get a phone call on the 45th day and we're able to put together an illustration and a portfolio of qualified delaware statutory trusts that not only can we get you to the identification level quickly but we can get the money to work quickly too so if you have a larger exchange and you're nervous about not having that money work for you prior to you even closing on your sale we can pick out the delaware statutory trusts and have your money invested within a few days for some people who are still building their portfolio the loss of control is very difficult for them to to accept a lot of times we see older clients that have already built their portfolio go into dsts because they don't want to manage real estate anymore maybe they don't qualify for that loan like we mentioned earlier um so there definitely is a typical client that you probably see and that you probably work with so we'd love to just find out what that typical client typically looks like for fortitude yeah thank you lauren so we really come across two different groups of clients that we work with well the first group is a family that's had an asset for a very long period of time it represents a large portion if not all of their net worth they can't afford to pay the taxes and they certainly can't afford to lose the principal so they're looking for tax deferral and preservation of capital within the risk tolerance of buying a dst because just by it being a private placement it's deemed a speculative investment the other group of investors which oddly enough have very very similar risk profiles are the extremely high net worth clients these clients don't necessarily need to make any more money they hate paying taxes and they hate losing principal so we made a cognizant decision years ago to really only look to approve both partners or sponsors as well as products that we think is highly likely to work out the way that the sponsor is marketing it and that's why we take due diligence so seriously in an environment that we're going to be attached to these products with the client for such a long period of time we want to make sure our clients are happy and we're not getting hit getting hit with surprises now that doesn't mean that there's not risks as i said in the last uh you know question of some potential risks there are risks of getting involved we're trying to mitigate those risks so that we're trying to minimize those risks for investors to be able to retire and get some passive income great thank you so much and actually daniel and bill are presenting on a webinar on unraveling the mystery of 1031 exchanges you can register for that webinar by going to www.exeter1031.com and go to our seminar page and there you'll find the link to register for that event as lauren was talking there had a couple follow-up questions i thought of you know one is kind of a take off from what you had already said about kind of using the the dsd as a backup identification uh property for the 1031 exchange what we find a lot of times too is realtors will call and say i've got a client who wants to sell their current property um but they're not willing to list that they're not willing to do the deal until they know what to buy and we can't seem to find replacement property so for for the realtors out there this could be a great solution to help them kind of facilitate that transaction and give the clients some assurances that there will be something there to buy when they're in their 45 day period i often speak at real estate schools trying to educate the realtors and give them a new tool in the toolbox and that's what we at fortitude investment group and our 1031dst.com website was built for it's a tool it's an educational tool to allow you to go in learn about a different uh class that will help you get listings as a realtor you might be courting a prospective client someone that you're looking to sell their property for them and they're asking you well what are you going to bring me besides somebody else's headaches it's a lateral movement i'm not going to make any more money but i'm going to walk away from the headaches that i do know for these brand new headaches that i'm not aware of so why would i do that well now you can partner up with us and let us come in present a passive portfolio of 1031 exchange eligible investments that that client now can say wow life after landlord i can sell my real estate i can retire receive passive income this this is what i've been looking looking at and if you're not learning this and if you're not bringing it to your clients someone else is so you're potentially going to lose a client that you've had even for a long time because somebody has taken the time to educate themselves on this this asset class so thanks for pointing that out bill sure it's always about they're boiling down to you know being a trusted advisor and really doing what's right for the client and if the client wants to get out of property management headaches or what have you that's the perfect way to do it i love your term life after landlord i can relate to that and that and that's a great point you bring up because at the end of the day we're not looking to push product dst's aren't for everybody it's not for as lauren said the active investor still growing trying to build although sometimes they want to cycle out of a of a time frame because they can't find anything quality so they say you know what in the next five to ten years better than paying taxes i'll roll into a dst portfolio and then i'll regroup and decide if i want to go back to direct ownership later but point being we're gonna know in conversation with investors before they invest if it's the right product because i truly do not want clients invested in these products that shouldn't be we have a great business a great practice and we don't need everybody to be our client we just need the ones that potentially are good clients or good good matches for the dst to be made aware of the dst so thank you guys for this opportunity and the platform to talk about this absolutely well thank you so much for being on the podcast dude we really appreciate it this is good information for the investor who's really looking for info on the dst so thank you for listening to the go ahead podcast today our next episode is going to be entitled unraveling the mystery of title holding trust or land trust again if you like our podcast or love our podcast please like it subscribe to it and share it we always encourage questions as well so if you have questions or topics you want us to address email us at ask exeterco.com or give us a call at you 619-239-3091 find us on youtube under go ahead ask by exeter and daniel look forward to doing the webinar in a couple weeks with you that's gonna be a lot of good information uh for clients as well so those clients who want more detailed information go ahead and go to our website that lauren mentioned and register for the webinar uh we'll see you all there thank you so much thank you bill this is for informational purposes only does not constitute as individual investment advice and should not be relied upon as tax or legal advice please consult the appropriate professional regarding your individual circumstance because investor situations and objectives vary this information is not intended to indicate suitability for any individual investor there are material risks associated with investing in dst properties and real estate securities including liquidity tenant vacancies general market conditions and competition lack of operating history interest rate risks the risks of new supply coming to market and softening rental rates general risks of owning or operating commercial and multi-family properties short-term leases associated with multi-family properties financing risks potential adverse tax consequences general economic risks development risks long holding periods and potential loss of the entire investment principle potential cash flows returns appreciation are not guaranteed and could be lower than anticipated diversification does not guarantee a profit or protect against a loss in a declining market it is a method used to help manage investment risk although an alternative product sponsor seeks to meet their offering objectives there is no guarantee they will be met past performance is not a guarantee of future results institutional grade high quality properties generally refers to a property of sufficient size and stature to merit attention from large national or international investors and typically have the characteristic of high quality assets in major markets and at price points beyond the reach of individual investors and smaller partnerships thank you for listening to go ahead ask with the exeter group join us for our next episode when we further unravel the mysteries of real estate [Music] you