By Kurt Fisette, Director of Sales, Starry

The internet plays a critical role in our lives. It has evolved from a luxury to a necessity, revolutionizing the way we work, play and communicate. With so many things we value being connected to the internet, it’s no surprise that it has had an enormous impact on the world of commercial real estate. High-speed internet is the second most important amenity to renters when choosing a new apartment (with air conditioning being the first). According to a recent National Multifamily Housing Council report, 93% of renters want high-speed internet access and 63% say they’d refuse to rent an apartment without it.^[1]

By Michael Trainotti

In 2018 under current law, the estate and gift tax is $11,180,000 for an individual and $22,360,000 for a couple until December 31, 2025. However, for the closely held business, succession planning for the next generation and continuation of the closely held business is still very important.  The same is true for rental real estate that is owned by either a limited liability company (“LLC”) or a limited partnership (“LP”). This article will discuss both types of ownership.

by Kay Properties

If you’re an investor considering a 1031 exchange in order to defer the Capital Gains Tax and its friends, chances are you’re looking at a Delaware Statutory Trust or a Tenant in Common to take a step back while your passive investment does the work for you. The real question is, which one is best for you? A DST or a TIC?

Please keep in mind that any investment comes with risks. We urge you to work with your Kay Properties representative to help you ascertain if the real estate aligns with your personal investment agenda and needs.

At Kay Properties, we prefer a DST property for the reasons below.

1. The TIC ownership structure can create problems

The ownership structure of a TIC requires unanimous consent for all major decisions (this includes when or if to sell the property, when to refinance, etc.) making it difficult if a rogue investor refuses to follow the group, exposing the rest of the investors to possible risk. If most of the investors want to sell or refinance, it can be a huge problem if one investor refuses to sell.

In contrast, the DST structure places the decision-making in the hands of the Trustee. This person is typically an affiliate of the DST sponsor company that put together the DST offering in the first place. Instead of relying on a group of other investors, a DST lets you rely on an experienced real estate sponsor company that has seasoned professionals trained in acquisitions, asset management, property management, capital markets, dispositions, and all other fields of  property investment. We find it easier to trust an experienced professional rather than a scattered group of investors who may or may not have much experience in this arena.

2. A TIC often requires higher minimum investments

The TIC structure only allows 35 investors, making an investor’s minimum investment on the higher end – often $500,000 or more. This means that an investor (depending on his/her exchange size) can often only invest in one or maybe two properties, concentrating the investor’s risk.

A DST on the other hand can typically have up to 499 investors, often which lowers the minimum investment amount to $100,000. This accessible investment amount allows us to diversify our clients’ investments into multiple DST offerings, letting them put their eggs in more baskets, and in our opinion, lowering their risk potential.

3. TIC investments usually take longer to close

Many TIC investments have a closing process that can take from 30 – 60 (or more!) days. This is due to the investors needing to be underwritten by the lender and then having to sign on the loan documents. If you’re an investor doing a 1031 exchange, you’re up against a time crunch that won’t allow you that much time.  A 1031 exchange has a 45-day identification and 180-day closing window, meaning that if you don’t get your property replaced in time, you’re going to be dealt with the Capital Gains Tax, depreciation recapture tax and possibly state taxes and/or the Medicare surtax.

However, with a DST, you can typically have your investment closed within 3 – 5 business days. In a DST, investors are not required to sign on the loan documents or be scrutinized and underwritten by a lender. This can be extremely helpful to those needing to identify their property in under 45 days, and then replace it in under 180 days during their 1031 exchange.

But these are just a few reasons why we prefer DSTs to TICs. There are of course a few special circumstances where we believe a TIC can also be beneficial to an investor, in conjunction with DSTs. Either way, we’d be happy to talk with you further on the subject and encourage you to call our representatives at any time!

Please visit www.kpi1031.com for more details, call us at 1.855.466.5927 or email info@kpi1031.com

There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. For an investor to qualify for any type of investment, there are both financial requirements and suitability requirements that must match specific objectives, goals and risk tolerances.

Diversification does not guarantee returns and does not protect against loss. This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please be aware that this material cannot and does not replace the Memorandum and is qualified in its entirety by the Memorandum.

This material is not intended as tax or legal advice so please do speak with your attorney and CPA prior to considering an investment. This material contains information that has been obtained from sources believed to be reliable. However, Kay Properties and Investments, LLC, WealthForge Securities, LLC and their representatives do not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) and 1031 Exchange properties. These include, but are not limited to, tenant vacancies, declining market values, potential loss of entire investment principal.

Past performance is not a guarantee of future results: potential cash flow, potential returns, and potential appreciation are not guaranteed in any way and adverse tax consequences can take effect. Real estate is typically an illiquid investment. Please read carefully the Memorandum and/or investment prospectus in its entirety before making an investment decision. Please pay careful attention to the “Risk” section of the PPM/Prospectus. All photos are representative of the types of properties that Kay Properties has worked with in the past. Investors will not be purchasing an interest in any of the properties depicted unless otherwise noted.

IRC Section 1031, IRC Section 1033, and IRC Section 721 are complex tax codes; therefore, you should consult your tax and legal professional for details regarding your situation. Securities offered through registered representatives of WealthForge Securities, LLC, Member FINRA / SIPC. Kay Properties and Investments, LLC and WealthForge Securities, LLC are separate entities.

DST 1031 properties are only available to accredited investors (generally described as having a net worth of over one million dollars exclusive of primary residence) and accredited entities only (generally described as an entity owned entirely by accredited individuals and/or an entity with gross assets of greater than five million dollars). If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney prior to considering an investment. You may be required to verify your status as an accredited investor.

by Bruce MacDonald
Finding success as a property manager goes beyond simply renovating apartments and renting them out. In order to truly do the work of property management, you need to know what works and what doesn’t in regards to communicating with tenants, caring for the property, and navigating the legal side of renting. The following nine strategies are essential to growing your career as a property manager.

Real estate parties heavily financed $75M campaign against the measure

Californians soundly voted down Proposition 10 on Tuesday, a victory for California’s real estate investors and a major blow to rent control advocates around the state.

If it had passed, Prop 10 would have repealed a state law barring new rent control measures in California, allowing local governments to pass broad new rent control laws. With 97 percent of precincts counted, the measure had only 38 percent of votes in favor. It needed more than 50 percent “Yes” votes to pass.

by Stephen C. Duringer, Esq. of the Duringer Law Group, PLC

Question.         I am a very conscientious landlord.  I want to ensure that my rentals are well maintained and that any maintenance issues are addressed immediately.  Every year, I send a notice to my residents informing them that I will inspect each unit.  I have been doing this for years without any problems.  This month I received a letter from one of my tenants telling me that I had no right to enter his apartment to look around, that he would not let me in.  What do I do?  Can I force my way in to do the inspection?

Answer.           Your policy of doing annual inspections is admirable, and is practiced by responsible landlords throughout California.  Most tenants welcome a responsible landlord’s actions in ensuring that all is well, and voluntarily cooperate in providing access upon the landlord’s reasonable request.  It is clearly in the best interest of all to ensure that any maintenance issues are promptly addressed, and that a spirit of communication and co-operation exists between a landlord and his residents.  Trouble is, your resident is right.  There is no specific provision in California law requiring a resident to allow the landlord access to merely “inspect” the premises.  California law states that a landlord can enter a rental unit only for certain reasons.   Those reasons are in an emergency, when the tenant has moved out or abandoned the premises, to make necessary or agreed repairs, decorations, alterations, or other improvements, to show the unit to prospective purchasers, tenants, or lenders, to provide entry to contractors or worker who are to perform work on the unit, or to conduct a pre move out inspection at the end of the tenancy, pursuant to court order, or to inspect the smoke detector or inspect the installation of a waterbed.  Conspicuously absent from this body of law is the unfettered right of a landlord to just inspect for the pure sake of just making sure everything is all right.  You cannot force your tenant to allow access for the purpose of inspection.  

by Brian Gordon

Every investment needs an exit strategy.  Without it, you’ve failed to map out a plan and like the old saying goes: “When you fail to plan, you plan to fail”.  For many investors, the exit may be transferring to your children, charitable donation or simply securing the passive income to supplement a comfortable retirement.  For many new investors in the Southern California multifamily market, the opportunity to exit couldn’t come fast enough. 

By Becky Bower 

Craigslist is a great tool to promote your vacancies and attract a ton of new, interested applicants, but it isn’t without its problems. The online classified site is notorious for being the playground for identity thieves, scammers, and digital criminals – and your rental properties could be their next target.

By Dee Soffer

Trust is fragile gift. One that you must hold on to dearly and handle it with utmost care. We need trust in everything we do. It’s that component in life that when you have it, everything becomes possible.  It is the basis of healthy relationships; first cultivated with ourselves and then with everything that surrounds us.

In this short article I want to focus on contractual trust. Where one party promises to act a certain way, and in return the other party promises to respond in an agreeable manner. This is the preliminary stage of establishing the very critical step of building the foundation for trust worthy relationships. The stage where expectations are built, and deliverables become metrics for character and capacities judgment. Presumably, both sides take this step with their best of intentions to meet expectations.

By Priyanka Agarwal, J Turner Research

Exorbitant fees for routine wear and tear and a rude onsite staff are only two of the reasons behind a bad move out. Find out what the others are.