You are getting older. You have enjoyed owning and managing your investment real estate and now it is time for you to enjoy the fruits of your labor. How can you transition your portfolio, defer taxes, and maintain all the benefits of owning real estate? When Sequent Real Estate + Wealth Management (sequent-rewm.com) opened their doors in April of 2020, the founders had a singular mission: To address this very issue in the marketplace and create an individualized investment plan for their clients. In this company’s founding, Peter Fisher, Eric Scaff, and Chuck Strickler have done just that. Sequent is a real estate first, client-focused wealth management company that helps client’s transition from active management of properties to passive real estate investing.
The DST is the passive ownership of choice
The Delaware Statutory Trust, or DST, is a way to stay in real estate and defer capital gains. A DST permits fractional ownership where multiple investors can share ownership in a single property or a portfolio of properties. The DST is a completely separate legal entity in which sponsors and accredited investors co-invest in either a single asset or across a portfolio of properties. The DST is created as a trust, and each owner has a “beneficial interest” in it for federal income tax purposes. It’s a co-investment option that has become increasingly popular for those seeking to transition from active to passive management of properties. The investor relies on an experienced professional real estate investment management firm to acquire, operate, manage, exit, and make all the decisions for the investment. Sequent helps clients find suitable DST opportunities in the current marketplace from a host of sponsors.
Why should suitable clients choose a DST? DSTs are tax-deferred 1031 exchange-friendly and are a qualified replacement property program. DSTs allow for individual investors to have a management-free investment. They’re able to still retain a source of potential income without having to actively manage the property.
Many real estate agents are unaware of the DST’s existence. Sequent’s combined 75+ years of investment experience and expertise in the DST area provide clients with additional options so they can transition to the next phase of their lives.
Many Financial Professionals lack real estate experience
The team at Sequent RE+WM possess a wealth of real estate experience that is extremely advantageous to clients. “Most of our competitors are financial advisors selling real estate products. We are real estate professionals selling real estate investments,” says Scaff. Real estate as an asset class has returned 11.02% 1 compounded annually over the last 30 years according to Nareit2. Sequent advises and provides access for clients on transitioning their investment property to passively managed institutional real estate investments.
As with all investing there are inherent risks. Real Estate Markets are cyclical and economic changes lead to volatile performance, to name a couple. Working with an experienced partner like Sequent will help navigate around potential pitfalls with a view to balancing inherent market risks.
“I believe my industry experience working for a DST sponsor for close to 15 years puts Sequent RE+WM in a better position to focus on the client,” says Fisher. Scaff has thirty years of experience in the real estate industry, including investment, management, leasing, construction, and corporate services. Strickler also has thirty + years of investment experience both in money management and commercial real estate.
DST investments have the same sorts of risk as out-right ownership.3 Sequent takes a conservative approach, performs deep due diligence, and knows what sponsors have a favorable track record. We believe these three key components are integral to selecting the appropriate DST investment for clients.
The marketplace is awash with options
Clients seeking to create their investment strategy will typically have to work with two separate firms because most real estate offices don’t offer wealth management and most wealth management firms don’t offer real estate services. Sequent offers both options, thus giving clients a holistic approach to their investment strategy. They are equipped to provide investment options for a client’s entire balance sheet.
1 Nareit REITWatch November 2020 -page 1 REIT Industry Fact Sheet, All Equity REITs data as of October 31, 2020
2 Nareit serves as the worldwide representative voice for REITs and real estate companies with an interest in U.S. real estate. Nareit’s members are REITs and other real estate companies throughout the world that own,
operate, and finance income-producing real estate, as well as those firms and individuals who advise, study, and service those businesses.
3 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 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, long hold periods, and potential loss of the entire investment principal.
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.
Sequent Real Estate and Wealth Management (SREWM) offers securities through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC-registered investment advisor. SREWM is independent of CIS and CAM.
