We all know that completing a 1031 exchange can be a very daunting task. The 1031 exchange guidelines state that an investor has 45 days after the date of the sale to identify replacement property and then 180 days to complete the exchange. This includes weekends and holidays. Many brokers and investors alike have expressed that this timeline comes very quickly. What complicates matters even more is that many times brokers and their clients are forced to identify properties with many moving parts. Some brokers also have issues finding the right property for their investors that fit their investment criteria and satisfies all their clients’ 1031 exchange goals and objectives. This is where Kay Properties can add value so that you as the broker can not only be a resource for your client, but also be an aid to them to possibly prevent a failed exchange.
For example, Kay Properties recently aided in a transaction for roughly $1 million. The client worked with a well-respected broker with a deep-rooted history of selling commercial real estate. He had several properties identified, but still had available space on his ID sheet (paperwork needed to identify replacement properties) to add DSTs as a back-up. The broker recommended Kay Properties as the firm that could help with the selection of DST properties. Based on our experience with similar transactions, Kay Properties was able to source opportunities that not only would be a back-up, but would also be a viable primary solution considering the client’s goals. Roughly one month after his ID period had ended, the broker gave us a call stating that the properties selected through him had fallen out and their client needed the DST properties that were selected as a backup. He also stated that the client was looking for opportunities with the potential for income. The client was thankful that the broker had set this up as a backup plan, averting what would have been a likely taxable event. DSTs can be closed quickly since they are typically already acquired and waiting for each investor to participate in the offering. As such, the client decided to move forward and was closed in each DST offering within 24-72 hours, completing the entirety of their 1031 exchange.
The above is the experience of one of our clients and may not be representative of the experiences of all clients. It is not guarantee of future performance.
As mentioned earlier, the second way brokers utilize our services is by covering potential “boot” of an exchange. This means that the investor purchasing property through their broker was not able to find enough total real estate value with their proceeds to have a full tax deferral. The 1031 exchange rules state that an investor must place all their 1031 exchange proceeds in order to have a full tax deferral. An example of this was when another broker approached Kay Properties with a client who had roughly $100,000 left over for an exchange that would be considered “boot” and potentially taxable. After a thorough exam of the market, the client decided that DSTs may be a good fit for the $100,0000 of unused 1031 exchange proceeds. The broker contacted Kay Properties to help him and his clients learn more about DSTs. After educating the client about DSTs, the client decided that working with Kay Properties would be an effective way to continue to defer taxable events regarding his 1031 exchange.
This is the experience of one of our clients and may not be representative of the experiences of all clients.This is not guarantee of future performance. Diversification does not guarantee profits or protect against losses.
It is important to remember that brokers are advised to dialogue with us early in their clients’ 1031 exchange process. Engaging us before the client sells their property and enters their 45-day window would be prudent and would give the investor time to understand DSTs and how they could potentially fit into their portfolio of real estate holdings.
Lastly, Kay Properties has many real estate brokers and agents who over the years have themselves sold investment property and decided that a 1031 exchange into DST properties with Kay Properties was the right solution for them. We look forward to discussing how Kay Properties and DSTs might work for you personally and professionally. Please visit www.kpi1031.com to register for access to DST 1031 offerings as well as you will receive a free book on DST 1031 exchange properties.
About Kay Properties and Investments, LLC:
Kay Properties and Investments, LLC is a national Delaware Statutory Trust (DST) investment firm with offices in Los Angeles, San Diego, San Francisco, Seattle, New York City and Washington DC. Kay Properties team members collectively have over 114 years of real estate experience, are licensed in all 50 states, and have participated in over $9 Billion of DST real estate. Our clients have the ability to participate in private, exclusively available, DST properties as well as those presented to the wider DST marketplace; with the exception of those that fail our due-diligence process. To learn more about Kay Properties please visit: www.kpi1031.com This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. This material contains information that has been obtained from sources believed to be reliable. However, Kay Properties and Investments, LLC, WealthForge Securities, LLC and their representatives do not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation. This material is not intended as tax or legal advice.
There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. For an investor to qualify for any type of investment, there are both financial requirements and suitability requirements that must match specific objectives, goals and risk tolerances. Securities offered through WealthForge Securities, LLC. Member FINRA/SIPC. Kay Properties and Investments, LLC and WealthForge Securities, LLC are separate entities.