1031 DST Investments: Why All-Cash/Debt-Free Delaware Statutory Trust Properties

10 Reasons to Consider All-Cash/Debt-Free DST Properties For Your 1031 Exchange

  1. No refinancing risk.

  2. Flexibility to hold through any potential market downturns, credit crunches, recessions and/or depressions.

  3. Provides 1031 investors the ability to diversify* a portion of their exchange dollars into an all-cash/debt-free property in an effort to lower potential risk.

  4. Eliminates the risk of taking on equal or greater debt in future 1031 exchanges. If an investor that was debt free purchases leveraged properties in a 1031 exchange, in future 1031 exchanges, they will have to take on equal or greater debt in order to avoid a massive tax consequence. The problem is that leverage may not be available at the time of the future 1031 exchange and/or interest rates may be at sky high levels. For example: the credit crunch of 2008 and the 18% interest rates of the early 1980s.

  5. Provides an investment option for direct cash investors – not currently in a 1031 exchange – to participate in real estate without the risks of using leverage.

  6. Allows clients to protect themselves from the financial catastrophe of a complete loss of their principal due to a lender foreclosure.

  7. Protects investors from a “balloon maturity” which is typically found in most leveraged DST properties.

  8. Oftentimes, all-cash/debt-free DSTs can have lower fees/commissions than leveraged DSTs (hint – one of the reasons we at Kay Properties often see other “advisors” telling clients that have no debt to replace to “leverage up” and buy DSTs with mortgages on them.) This is a blatant disregard to the potential catastrophic risk that the 1031 investors are taking on, by exchanging from an all-cash/debt-free situation into one with a 50-60% loan-to-value.

  9. Oftentimes, an all-cash/debt-free DST can have a higher projected cash flow than leveraged DSTs due to there being no monthly debt service that needs to be paid to a lender.

  10. Buying investment real estate debt-free is considered by many to be one of the safest ways to own real estate.

It just makes sense: Buy it free and clear to potentially lower future headaches, protect your principal and protect your future.

*Diversification does not guarantee profits or protect against losses.

About Kay Properties and www.kpi1031.com

Kay Properties is a national Delaware Statutory Trust (DST) investment firm. The www.kpi1031.com platform provides access to the marketplace of typically 20-40 DSTs from over 25 different DST sponsor companies, custom DSTs only available to Kay clients and a DST secondary market. Kay Properties team members collectively have over 400 years of real estate experience, are licensed in all 50 states, and have participated in over 30 Billion of DST 1031 investments.

Diversification does not guarantee profits or protect against losses. All real estate investments provide no guarantees for cash flow, distributions or appreciation as well as could result in a full loss of invested principal. Please read the entire Private Placement Memorandum (PPM) prior to making an investment. This case study may not be representative of the outcome of past or future offerings. Please speak with your attorney and CPA before considering an investment.

There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential distributions, 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 FNEX Capital, member FINRASIPC.