1880 S Dairy Ashford Rd, Suite 650, Houston, TX 77077

Kay Properties and Investments Explores the Significance of Delaware Statutory Trust in 1031 Property Exchanges

Torrance, California, United States, December 4, 2023 – A DST stands for Delaware Statutory Trust and is an entity that is used to hold title to investment real estate. In some ways this is similar to how a limited liability company or an LLC can hold title to real estate; however, unlike an LLC, a property structured as DST 1031 properties will qualify as like-kind exchange property for a 1031 exchange according to the IRS revenue ruling 2004-86.

The typical investment for a DST 1031 Property is $100,000 which allows investors to diversify* his or her exchange proceeds among multiple properties. DST 1031 investments also have various leverage ratios to potentially satisfy an investor’s exchange requirements of taking on equal or greater debt.

How Do DST Properties Help Investors with Their 1031 Exchanges?

DST properties help 1031 exchange investors because in many cases, the properties are often structured with “built-in” debt to satisfy the 1031 exchange requirements (although many DSTs on the www.kpi1031.com platform are structured without debt). This is important because to qualify for a full tax deferral on capital gains taxes from two of the basic 1031 exchange requirements necessary for the sale of a property include:

  1. Purchase equal or greater value in replacement properties as you had in relinquished property and
  2. Reinvest 100% of the net sales proceeds into a replacement property or property.

So, let’s say you sold a property for $300,000, but you had a $100,000 loan on the property. Once you paid off that loan you would have $200,000 in equity left over. To complete the full 1031 exchange, you would have to replace the full $300,000. So, what are your options? You could:

  1. Put an extra $100,000 out of your pocket.
  2. Borrow that $100,000 from a bank or other lender; or
  3. Invest in a DST that already has the debt “built-in” so to speak.
  4. Access to Leveraged and Debt-Free DST 1031 Investment Properties Today

Kay Properties’ DST 1031 exchange online marketplace features investment opportunities that span a wide range of debt levels, from as low as 25% upwards of 70%.

Also, for investors that don’t have any debt to replace since they owned their previous property free and clear with no loans, there are DST investments that are debt-free and have no mortgages attached to them. Kay Properties and Investments is a leader in providing investors with debt-free real estate investment options for their 1031 exchange and direct cash investments.

More and more wealth advisers and investors alike are attracted to debt-free real estate investments as a prudent strategy. Recent events such as rising interest rates, bank failures, and of course, the COVID-19 pandemic serve as reminders that black swan events are real and that using leverage comes with risk. The bottom line is that the risk of lender foreclosure, which is always mentioned but rarely considered a realistic possibility, has suddenly become much more of a reality.

How DST 1031 Properties Allow Multiple Investors to Hold Beneficial Interest

Another component that is important for investors to understand is that a DST 1031 Property is an ownership structure that allows multiple investors to hold undivided beneficial interests in the real estate assets of the trust. The term, “beneficial interest” means that investors hold a percentage of the ownership and that no one owner can claim proprietorship over the DST portfolio or even individual aspects of the real estate.

Another reason investors are attracted to DST 1031 exchange properties is because of the passive nature of a DST 1031 property. Many multifamily residential owners become weary of the midnight calls from the tenants complaining about everything from a mouse to the noisy tenants upstairs. Therefore, they decide to sell the asset and invest in a DST 1031 property, where everything associated with the DST real estate structure is managed by professional management including rigorous due diligence, day-to-day upkeep, and eventual disposition of the asset. The investor simply sits back and lets their investment work for them. That’s why this is called passive investing, and it is another major strategy for investing in DST 1031 properties.


Contact information:

Name: Dwight Kay

Website: https://www.kpi1031.com/

Company: Kay Properties and Investments, LLC

Phone: 1-(855) 899-4597

Address: 21515 Hawthorne Blvd, Suite 360, Torrance, CA, United States, California

Email: info@kpi1031.com