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4 Steps to Finding the Right DST Securities Representative

Perhaps the most critical relationship an investor needs with a potential 1031 exchange or DST transaction is the licensed securities professional who will ultimately help guide the investor through the entire process. Finding the right one can be challenging.

Just consider:

  • It’s estimated there are over 300,000 Financial Advisors in the U.S.1 Some have deep experience in helping investors with 1031 exchanges. Others have none.

  • There are 40,500 Google searches every month for ‘1031 exchanges.’ Clearly, there are thousands of individuals looking for advice on a business property transaction.

  • There was $2.52B in securitized 1031 exchange sales in 20182; up 28% from 2017 and DSTs accounted for nearly $2B3. That’s a lot of inventory to choose from.

With statistics like these, it’s imperative for investors to find a licensed securities representative they can trust and one with the necessary experience and know-how to get DST transactions completed accurately and efficiently.

What makes this search so pressing for many individuals is the fact there are inherent deadlines and time constraints associated with DST transactions, and that permits only limited time to develop a close relationship with a rep.

As you start your search, however, here are four things to look for that will help you in finding the right representative for you:

Prior Commercial Real Estate Experience
Licensed securities representatives may be experienced with financial planning, portfolio creation and stock and bond investing. But that doesn’t mean they are knowledgeable about commercial real estate. Look for a rep who has broad experience selling and evaluating income-producing real estate and one who also understands DSTs and can answer the tough questions on how DST offerings compare to each other.

References from Recent and Long-term Clients
Your investment in a DST is the beginning of what should be a long relationship with your securities representative. Ask for references, new and old, and make sure those clients have had positive experiences with the rep and that he’s earned their trust with the hard work and commitment he’s shown.

Face-to-face Meetings
When forming a new relationship, nothing can replace the value of an in-person meeting. In fact, a recent study by Harvard social psychologist, Amy Cuddy, suggests that people quickly answer two critical questions when they first meet someone:

  • Can I trust this person?
  • Can I respect this person?
Psychologists refer to these dimensions as warmth and competence, and only an in-person meeting permits you to address those questions satisfactorily. So, make sure you schedule one. 

Background Checks
Technology is your friend for this last element to evaluate in selecting the right securities professional. The regulatory body that oversees the broker/dealer industry – FINRA – offers a website called BrokerCheck. It provides a detailed employment history on all securities representatives actively registered with broker-dealers. For other representatives registered as Investment Advisors, the SEC provides a website with detailed employment and industry experience for each individual.

We’d also encourage you to identify only securities reps who have real estate licenses, and similar background checks can be conducted on these licenses by visiting the Department of Real Estate website in the state where the license is held.

Benefits You’ll Receive
So, once you find the right rep, what can you expect them to do for you regarding your DST transaction. Well, a multitude of things including help with:

  • Identifying and vetting the best sponsors
  • Evaluating the experience and skill of the operator
  • Assessing the structure of the master lease
  • Analyzing the projected returns and property valuation
  • Examining fee structure for competitiveness
  • Weighing the reasonableness of the asset class and business plan
  • Reviewing exit strategies for appropriateness
  • Uncovering any conflicts of interest
Remember, when considering a DST transaction, it pays to investigate the securities representative you’d like to work with. Make the right decision up front and your experience with DST investing should be a positive one!

  1. https://www.financial-planning.com/news/cerulli-is-wrong-about-financial-advisor-headcount-hiring
  2. https://nesfinancial.com/growing-market-for-1031-delaware-statutory-trust-investments
  3. http://blog.factright.com/dst-due-diligence-in-a-hot-market

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Paul Getty

Paul Getty is a licensed real estate broker in the state of California and Texas and has been directly involved in commercial transactions totaling over $2 billion on assets throughout the United States. His experience spans all major asset classes including retail, office, multifamily, and student and senior housing. Paul Getty’s transaction experience includes buy and sell side representation, sourcing, and structuring of debt and equity, work-outs, and asset and property management. He has worked closely with nationally prominent real estate brokerage and investment organizations including Marcus Millichap, CB Richard Ellis, JP Morgan, and Morgan Stanley among others on the firm’s numerous transactions. Paul Getty also maintains a broad network of active buyers and sellers of commercial real estate including lenders, institutions, family office managers, and high net worth individuals.

Prior to founding First Guardian Group/FGG1031, Paul Getty was a founder and CEO of Venture Navigation, a boutique investment banking firm specializing in structuring equity investments made by institutions and high net worth individuals. He possesses over 25 years of comprehensive worldwide business management experience in environments ranging from early phase start-ups to multi-billion-dollar corporations. His track record includes participation in IPOs and successful M&A activity that has resulted in investor returns of over $700M.

Paul Getty holds an MBA in Finance from the University of Michigan, graduating with honors, and a Bachelor’s Degree in Chemistry from Wayne State University. He is a member of the Institute of Real Estate Management (IREM), a Certified Property Manager Candidate (CPM), and a member of the US Green Building Council. Paul Getty holds Series 22, 62, and 63 securities licenses and is a registered representative with LightPath Capital Inc, member FINRA /SIPC.

Paul Getty is a noted speaker, author, and actively lectures on investments and sales and management related topics. He is the author of The 12 Magic Slides, Regulation A+: How the JOBS Act Creates Opportunities for Entrepreneurs and Investors, and Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST), available on Amazon and other retail outlets.

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