Kay Properties & Investments Helps Real Estate Investor with High Loan to Value (LTV) Successfully Complete $1.2 Million DST 1031 Exchange Just In Time to Avoid Significant Tax Consequence

After real estate investor was unable to find a suitable replacement property for a 1031 exchange, recommends DST 1031 specialists Kay Properties & Investments coordinate a successful DST 1031 exchange involving a “Zero Coupon” DST offering 

(Torrance, CA)  Kay Properties & Investments recently announced the successful completion of a DST 1031 exchange that involved a crunched timeline and a large debt replacement challenge. With literally days left on his 45-day 1031 identification deadline, the real estate investor was staring at a significant tax consequence that would have impacted his long-term investment strategy forever. However, after contacting Kay Properties & Investments, the investor was able to learn about DST 1031 exchanges and garner outside counsel from his tax attorney and financial advisor. Simultaneously, the Kay Properties team of DST 1031 exchange specialists started to create a customized strategic solution for the client exchange needs. 

“One of the hallmarks of Kay Properties is that our registered representatives never look at any DST 1031 exchange as ‘one size fits all’. Every situation is unique but because of our deep knowledge on the subject, we can find workable solutions for just about any scenario. In this particular situation, we advised the client to consider with his CPA using a Zero Coupon DST to fully offset capital gains taxes on his million-dollar-plus property sale. While not the first time we have had to advise clients to use a Zero-Coupon DST as we have helped clients utilize them for many years, it is an unusual situation and certainly the lesser of two evils compared to having to pay a great deal in taxes,” said Dwgiht Kay, Founder and CEO of Kay Properties & Investments. 

A Zero Coupon DST Offering typically does not include monthly cash flow because any rental income is used to pay the mortgage principal, taxes, and interest each month. In addition, the average zero coupon offering typically has a loan-to-value of anywhere from 70% – 90%, which allows the investor to place a small amount of equity into a DST offering to buy a much larger amount of real estate with long lease terms and hold periods on buildings that typically have investment grade tenants. 

“In this situation, the client was a sophisticated New York real estate investor that was struggling to find quality 1031 replacement properties. He had been searching nationally for replacement properties only to keep coming up empty on viable options. This scenario was exacerbated by the fact that he had a large debt component on the relinquished property that he needed to replace, so getting a mortgage in the tight time frame added to a compounding problem,” said Jason Salmon, Senior Vice President and DST 1031 expert with Kay Properties & Investments. 

Because he was unfamiliar with DSTs, the Kay Properties team helped educate him about the nature of DSTs, including their benefits and respective risks. Then Kay Properties helped him identify several viable DST replacement properties that would work within his 1031 deadline, including a blended mix of real estate that involved placing a portion of his equity into a zero-coupon DST offering while placing the remainder of his proceeds into a more moderate loan to value range of approximately 50%. 

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 2093 Philadelphia Pike Suite 4196 Claymont, DE 19703.

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