Alternative investment products, including real estate investments, notes & debentures, hedge funds and private equity, are considered highly speculative and involve a high degree of risk.  They often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor’s interest in alternative investments, and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products often execute a substantial portion of their trades on non-U.S. exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in U.S. markets. Additionally, alternative investments often entail commodity trading, which involves substantial risk of loss. Securities offered through SANDLAPPER Securities LLC and are not FDIC insured and may lose value.

 A 1031 Exchange refers to the section of the Internal Revenue Code that allows for the deferral of gains or losses from the sale of real property when specific guidelines are met and appropriate replacement property is identified and acquired in a specific time period.  With regard to IRC §1031 exchanges of investment real estate, you must understand the inherent risks of real estate investing, whether securitized real estate or un-securitized real estate include but are not limited to; the absence of guaranteed cash distributions; lack of liquidity; measurable and immeasurable risks of owning, managing, operating and leasing properties; possible conflicts of interests with managers and affiliated persons or entities; the risks associated with leverage; tax risks; declining markets and challenging economic conditions as well as the risks associated with executing an exchange including but not limited to; disallow ability of your exchange, changes in tax laws, fees to execute an exchange or other known or unknown regulatory challenges.

There are significant risks of investing in DSTs beyond standard real estate risks including, but not limited to complete reliance of the program sponsor/manager and its continued solvency, competency and success or if leveraged, the inability to re-finance a program at the end of the term of said loan.  There may be considerable conflicts of interest with program sponsors that will be completely out of your control. If investors are considering the use of DSTs for real estate investing or as suitable replacement property in an exchange, you must read and understand the program’s private placement memorandum and pay particular attention to the Risk Factors specific to the program and sponsor as outlined in the PPM. Note the risks associated with giving complete discretion and control of your property(ies) management to a third party.  You will not be able to make any decisions regarding the management, leasing or disposition of your asset(s).

Investment real estate comes with substantial risks and you should understand the inherent risks of real estate investing. Whether securitized real estate or un-securitized real estate the risks include but are not limited to; the absence of guaranteed cash distributions; lack of liquidity; measurable and immeasurable risks of owning, managing, operating and leasing properties; possible conflicts of interests with managers and affiliated persons or entities; the risks associated with leverage; tax risks; declining markets and challenging economic conditions, changes in tax laws, on-going fees or other known or unknown regulatory challenges.  Income and diversification are not guaranteed.  It should be understood that the ultimate risk of investing in real estate and DSTs could include the complete loss of principle investment.

DSTs are offered by Private Placement Memorandum to qualified accredited investors as a Private Placement Security.  Accredited investors have a net worth of $1,000,000 or more, not including their primary residence and/or have an income over the last 2 years of $200,000 for an individual or $300,000 for a couple.  If qualifying as an accredited investor under the income criteria, there must be a reasonable expectation by the investor that these income levels will continue into the future. Businesses, Trusts and other entities may also qualify as accredited.

For more information on this matter or if we may be of further assistance please contact us for a free consultation by calling us at 1 (800) 781-1031 or (714) 939-1031 or by e-mail at info@cornerstoneexchange.com .