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 DSTs from over 25 different sponsor companies, custom DSTs only available to Kay clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST (typically 20-40 DSTs) and a DST secondary market.  Kay Properties team members collectively have over 115 years of real estate experience, are licensed in all 50 states, and have participated in over 21 Billion of DST 1031 investments.

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.  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.  There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily 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.

Nothing contained on this website constitutes tax, legal, insurance or investment advice, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument. Securities offered through Growth Capital Services, member FINRASIPC, Office of Supervisory Jurisdiction located at 582 Market Street, Suite 300, San Francisco, CA 94104.

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