|
UP / Thumb of Michigan | About 14 years ago, I traded a farm into, among some other things, a grocery store. It was a Winn Dixie in Panama City Beach. Partnered with 22 of my brand new best friends I've never met, through AEI.
The structure was a Tennent in Common (TIC) with a triple net (NNN) lease. The NNN worked fine- the TIC was problematic. AEI had originally built the store for Winn Dixie. AEI was building stuff, keeping 100% ownership for 4 or 5 years, took some tax bennies, and then sold off up to 70 or 80%. That's where the 1031 people come in. The expected time interval to own the building was 7 to 10 years, although not written in stone. I was good with that time line. When the property was offered, AEI had just negotiated a 5 or 6 year lease, with lease extensions allowed if both sides agreed.
The ownership units aren't real liquid. They can be sold, and in fact I purchased more units from a family that was settling an estate. They are usually a discounted value when that happens. Depends on a few things, how much time is left in the lease for one.
Anyway- AEI was doing the management. Winn Dixie was paying the rent. Management had some suggestions on the future of us owning the store, one of which was selling. Everyone except for one person agreed. One person can stop the deal, no matter how much they own, and that was a problem. Without going into all the rest of the gory details, we eventually sold the store. One person was able to dictate the sale, and was able to extort some more money than the other owners got to close the deal. Fortunately, the buyer was the one to pay extra, the rest of us got what we'd agreed to already.
The NNN lease worked great. I was happy with the investment, the management, and I did very well when we eventually sold it. It was the TIC that was a bugger, I'll never do anything again with a TIC structure.
I took the proceeds from that sale and bought a couple DST's through AEI and another company. Instead of me and 22 of my brand new best friend's I've never met, each DST may have 200 people as owners. The next thing is that I have zero input into anything. The manager manages, and when the time is right, they'll sell. They don't need anyone's approval. Some people wouldn't like that hands off deal. I happen to like it a lot, I've got more to do every day than I want as it is. When its time to sell, I can take the proceeds and do a 1031 again. None of the DST's I traded into utilize leverage. The returns aren't as high as a DST that can borrow money, but there's more risk of course as well.
I was offered a UPReit position a couple years ago. I guess it would work for some, but I had zero interest in it. Problem is when you sell, that's it. Can't invest the proceeds into another 1031 exchange property . Like I said, they may work for some. I had no interest in them. I intend to continue to roll the sales into other 1031 deals as rime goes on.
My emails good.
Edited by pat-michigan 12/24/2025 06:16
| |
|
Investing in commercial real estate and using 1031
