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Join us as we speak with Paul Moore, founder of Wellings Capital. After starting his career at Ford Motor Company, Paul went on to co-found a staffing firm that he later sold, and then got involved in real estate. After investing in single families he progressed to multi-family properties, and then evolved to self-storage and mobile home parks.
Episode Highlights:
- Delaware Statutory Trusts (DSTs) are an excellent place to put your 1031 exchange sale proceeds to defer capital gains tax
- Most DSTs are available through broker/dealers who charge a commission of 6%
- With a 1031 exchange you must identify 3 properties within 45 days of selling your property, then must close within six months after selling your property. However, the problem is that most deals will be gone in less than 45 days. Delaware Statutory Trusts solve this problem.
- Properties in DSTs are typically stabilized with no value add component, which results in safer, albeit, lower returns. Properties in DSTs often use triple net leases to push property maintenance expenses onto the tenants.
- On a DST deal, the GP typically receives a 1% liquidation fee, an up-front fee of 2%, and an on-going property management fee of 1% to 2%. Also, depending on the trust documents, the GP is usually allowed to keep the excess return over 6%, called the “scrape”
- A typical DST deal is $20 million to $100 million so fees for the GP can be much more meaningful than deals smaller than that
Best Way to Contact Paul:
https://www.wellingscapital.com/
Helpful Links:
https://www.realized1031.com/