By Dwight Kay, Founder and CEO, Kay Properties and Investments
Understanding DST 1031 Properties
A DST, or Delaware Statutory Trust, is an entity used to hold title to investment real estate. It functions similarly to a limited liability company (LLC) in terms of property ownership. However, unlike an LLC, a DST property qualifies as like-kind exchange property for a 1031 exchange, as per IRS revenue ruling 2004-86.
Investing in a DST 1031 Property allows investors to diversify their exchange proceeds among multiple properties. The typical investment amount for a DST 1031 Property is $100,000, enabling investors to meet exchange requirements and potentially take on equal or greater debt.
Exploring Delaware Statutory Trust Examples
Kay Properties and Investments offers a range of DST real estate properties for accredited investors seeking a 1031 exchange or direct cash investment. Although the specific properties mentioned here are now fully subscribed, they serve as examples of the diverse opportunities available on the kpi1031.com marketplace.
Dwight Kay, a renowned expert on Delaware Statutory Trusts, discusses these properties and provides valuable insights for potential 1031 exchange investors. His expertise and straightforward approach make this interview a "must-watch" for those interested in DST real estate properties and 1031 exchange strategies. Dwight Kay is also a regular contributor to Kiplinger, where he shares extensive knowledge on DST properties and exchange strategies.
How DST Properties Facilitate 1031 Exchanges
DST properties offer significant advantages to 1031 exchange investors. Many DSTs are structured with built-in debt, which helps satisfy the exchange requirements. For example, if you sold a property for $300,000 with a $100,000 loan, you would need to replace the full $300,000 to complete a successful exchange. Investing in a DST property with pre-existing debt allows you to meet this requirement without additional out-of-pocket expenses or borrowing from external sources.
Accessing Leveraged and Debt-Free DST 1031 Investment Properties
Kay Properties' online marketplace provides access to a wide range of DST investment opportunities. These options cater to investors with a variety of debt levels, from as low as 25% to as high as 70%. For investors who owned their previous property without any loans, debt-free DST investments are also available. These properties have no mortgages attached to them, offering a secure investment option that aligns with prudent investment strategies.
Recent events, such as rising interest rates, bank failures, and the COVID-19 pandemic, have highlighted the potential risks associated with leveraging investments. Choosing a debt-free DST property can mitigate these risks and provide a level of stability that investors find attractive. With the kpi1031.com marketplace, finding loan-to-value options that fit your investment objectives is relatively simple.
Understanding Beneficial Interest in DST 1031 Properties
One key aspect of DST 1031 Properties is that they enable multiple investors to hold undivided beneficial interests in the trust's real estate assets. The term "beneficial interest" means that investors own a percentage of the overall ownership, preventing any single owner from claiming sole proprietorship over the portfolio or specific aspects of the real estate.
Investors are drawn to DST 1031 exchange properties not only for their beneficial interest structure but also for their passive nature. Many residential property owners grow tired of the responsibilities that come with active management, such as dealing with tenant complaints and property maintenance. By investing in a DST property, investors can enjoy a passive investment experience. Professional management takes care of due diligence, day-to-day operations, and eventual disposition of the asset. It allows investors to sit back and let their investment work for them, making DST properties an excellent choice for passive investing.
Video: How a Kay Properties Client Embraced Passive Management
It's essential for all investors to watch the YouTube video where a Kay Properties client shares her experience with the Delaware Statutory Trust structure. This structure allowed her to transition from actively managing her real estate assets to enjoying the passive nature of DST properties. The client's firsthand account highlights the benefits of DST investing and how it can provide a fulfilling investment experience.
Exploring Typical DST 1031 Properties
Kay Properties & Investments specializes in DST 1031 exchanges and offers a proprietary marketplace of DST properties for accredited investors. On any given day, there are typically 20-40 DST 1031 properties available, with a minimum investment of $25,000. These offerings, provided by over 25 DST sponsor companies, span various sectors, including medical facilities, dollar stores, industrial logistic centers, and multifamily residential buildings.
While the specific properties mentioned here are not currently available for investment, they serve as examples of the potential opportunities that investors can explore. Each property has unique characteristics, tenants, lease terms, and financing structures. Kay Properties recommends considering essential services properties as part of a DST 1031 portfolio, given their stability and potential for long-term growth.
Please note that the names listed above belong to their respective copyright and trademarked companies. All images used are representative of the types of properties available.
To learn more about Delaware Statutory Trust properties and 1031 exchange investing, watch the informative video below featuring the experts at Kay Properties and Investments.