DSTs and Owning Remotely

Congratulations landlords, “The powers that be” now estimate the number of renters behind on payments may constitute 1 in 4 tenants nationwide, or 25%.  Locally, this will only get worse.

In their collective “wisdom” Multnomah County Commissioners just voted unanimously to extend the county’s eviction ban through July 2nd, regardless of what the state does.

All this will translate into is more unpaid back rent for landlords and an even harder time making their mortgage payments to lenders.  If I were a conspiratorialist, I might think this is intentional.

We have blogged extensively regarding the expropriation of landlord rights up and down the left coast.  The logical stopping point for this on the part of progressive municipal and state governments is the extirpation or local extinction of the landlord class itself.

How better to do this than by forcing them into bankruptcy?  Make no mistake, that is exactly where all this is heading.  Despite a 33.1 percent economic growth rate in the third quarter of the year, state and local officials still believe it necessary to run interference for renters at the expense of rental housing owners.

This “humanitarianism” is simply a veneer for the authoritarian impulses and radical social restructuring that we believe characterizes most blue states.  This is particularly true in California, Oregon and Washington.  If you wish to live and do business in a state without these despotic tendencies, your best bet is to move red.

The ongoing exodus of workers from high cost, high tax, lousy service urban areas should tell income property investors that America’s signature, business hubs are changing.  Pre-pandemic, companies were already giving employees more freedom to work remotely.  Covid-19 hugely exacerbated this process.  This may profoundly reshape the urban – suburban – exurban nexus.

The promise that a Covid-19 vaccine will eventually bring things back to normal might not be true.  The pandemic forced an entire generation of Americans to collectively swap the physical for the digital world in a matter of months.  Retailers must now learn to operate without stores, business travelers without airplanes and workers without offices.  What started out as a temporary expedient may very well become permanent.

A recent study by Pew Research Center shows that a majority of workers polled, 54% currently work from home and want to continue doing so for all or most of the time after the coronavirus pandemic is over.  The survey, which polled over 10,000 adults, also found that 87% felt transitioning form the office to working from home was “very” or “somewhat” easy.

If a majority of Americans now feel comfortable working remotely, why shouldn’t income property investors make a similar transition and consider owning remotely?  This is simply a further manifestation of a process that has been underway for a century:  the dematerialization of the economy. 

The very same tools that allow so many to live and work remotely are available to income property investors to own remotely.  This has the potential to be hugely emancipating from an opportunity standpoint.

It’s past time for income property investors to consider making this change.  Heretofore, they have been self-limiting due to their “hands-on” mind set.  Collectively, they have a very strong sense of being able to do it better themselves and are reluctant to surrender this responsibility to others.

However, using the same information technology that has emancipated millions of American workers, income property investors may be able to hugely increase their commercial real estate palette.  It is simply a question of finding the right partner to help you shop and manage; enter DSTs.

Nearly all major DST property providers now make their programs available to investors on-line.  Many provide virtual tours as well.  Subsequent investor meetings and updates now employ Zoom technology.  It may be just a matter of time before the ability to walk a property at your discretion is available.

Owning remotely may also provide income property investors with the ability to “manage” their real property portfolio in much the same manner as securities. 

In the stock and bond world need for a balanced portfolio goes without saying.  Some assets play offense while others play defense. 

The same can be true of real property.  Depending on type and location some may manifest significant appreciation potential while others are held primarily for income.

The fractional nature of DST ownership may allow for greater portfolio balance than you can possibly achieve owning independently.

“Virtual ownership” if you will, obviously does not obviate the need for these physical assets.  However, it can make their ownership and operation much easier than income property owners ever imagined.  The way you live has now changed, why shouldn’t the way you own?


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