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In today’s complex real estate market, understanding the nuances of 721 UPREIT DST structures is essential for any investor.

One of the critical features of these arrangements is that the REIT holds the option — but not the obligation — to purchase the DST’s property through the UPREIT strategy. This subtle distinction can have profound implications for investors, making due diligence not just advisable, but critical.

The anatomy of a 721 UPREIT DST structure

In a typical 721 UPREIT DST transaction, a property is initially transferred into a Delaware statutory trust (DST), allowing investors to acquire a beneficial interest in real estate without directly managing the asset via a 1031 exchange.

Later, the REIT may choose to acquire the property from the DST. However, because the REIT only has the option to execute this purchase and is not obligated or compelled to do so, the decision rests entirely in the hands of the REIT.

This arrangement means that while investors might be enticed by the benefits of 721 UPREIT DST investments — such as tax advantages and a passive income stream potential — they also bear certain risks.

One key risk could be that the REIT may decide to mark up the purchase price of the property when transferring it from the DST to its own portfolio, regardless of changing market conditions.

The importance of market timing and due diligence on 721 UPREIT investments

Imagine a scenario where a REIT acquires a property for $100 million in 2022. Over the next couple of years, macroeconomic factors — particularly rising interest rates — cause the property’s market value to decline by 20%.

By 2024, the property is realistically worth only $80 million. Despite this downturn, some REITs may opt to mark up the property’s price by 20% based on their original 2022 acquisition cost.

This maneuver results in DST investors being charged $120 million for an asset that, in current market conditions, is worth significantly less at just $80 million.

This example underscores a critical point: Since the REIT is not obligated to acquire the property in a 721 exchange from the DST investors, it can delay or even forgo the transaction if market conditions deteriorate further.

In such cases, investors could find themselves locked into a DST investment with inflated valuations and misaligned expectations.

Understanding valuation and markups: Crucial items for 721 UPREIT investors to consider

One of the first questions an investor should ask is whether the DST they’re considering has been subject to a markup by the REIT — and if so, by what percentage.

Often, these REITs, already in possession of the property, sell it to the DST at a marked-up price that can sometimes exceed 20% (this is often referred to as a “non-arm’s length transaction”).

A significant markup can be a red flag, suggesting that the underlying asset may be overvalued and that hidden fees could be eroding potential returns. While such markups are disclosed in the fine print of the private placement memorandum, they are often omitted from the estimated use of proceeds table.

This omission makes it challenging for investors to track the true cost basis and understand the complete financial picture, thereby increasing the risk of misaligned expectations over time.

The critical role of expertise in navigating 721 exchange UPREITs

Given these complexities, investors must exercise caution and thoroughly assess both the acquisition price that the REIT purchased the property for and the subsequent markups that they are passing along to DST investors.

Market conditions are dynamic, and properties that were once market value can quickly depreciate due to economic shifts, such as changes in interest rates.

With the REIT’s ability to exercise or not exercise its option at a time of its choosing, the risks associated with overvaluation become even more pronounced for 721 UPREIT DST investors.

Conclusion

The flexibility inherent in 721 UPREIT DSTs, while offering significant benefits, also introduces a layer of risk that must not be underestimated. Investors need to be acutely aware that a REIT’s option but not obligation to acquire a property could lead to situations where market values and marked-up prices could truly impact an investor.

This divergence underscores the necessity of due diligence on 721 UPREIT DSTs and investments — ensuring that investors are informed about the markups, the timing of market changes and the underlying financial risks.

Ultimately, due diligence never guarantees a profitable investment, and all 721 UPREIT and DST investments could result in a full loss of principal invested. This is the reason that trying to understand exactly what is going on at the 721 UPREIT DST and the final REIT destination is crucial.

I spend a great amount of time understanding these intricate details in order to share the implications of them with our investors. After nearly two decades of experience in the 1031 exchange and 721 UPREIT DST space, I have learned that thorough due diligence is the key to making informed investment decisions.

Unlike many financial advisers, wealth managers, RIAs and even DST brokers, I make it an imperative to delve into the fine print and scrutinize the markups and valuation methodologies that can often be overlooked.

Understanding the option but not the obligation — and knowing when and how that option might be exercised — can be the difference between a profitable investment and a costly misstep.

In today’s complex real estate market, understanding the nuances of 721 UPREIT DST structures is essential for any investor. One of the critical features of these arrangements is that the REIT holds the option—but not the obligation—to purchase the DST’s property through the UPREIT strategy. This subtle distinction can have profound implications for investors, making due diligence not just advisable, but critical.

The Anatomy of a 721 UPREIT DST Structure

In a typical 721 UPREIT DST transaction, a property is initially transferred into a Delaware Statutory Trust (DST), allowing investors to acquire a beneficial interest in real estate without directly managing the asset via a 1031 exchange. Later, the REIT may choose to acquire the property from the DST. However, because the REIT only has the option to execute this purchase and is not obligated or compelled to do so, the decision rests entirely in their hands.

This arrangement means that while investors might be enticed by the benefits of 721 UPREIT DST investments—such as tax advantages and a passive income stream potential—they also bear certain risks. One key risk could be that the REIT may decide to mark up the purchase price of the property when transferring it from the DST to its own portfolio, regardless of changing market conditions.

The Importance of Market Timing and Due Diligence on 721 UPREIT Investments

Imagine a scenario where a REIT acquires a property for $100 million in 2022. Over the next couple of years, macroeconomic factors—particularly rising interest rates—cause the property’s market value to decline by 20%. By 2024, the property is realistically worth only $80 million. Despite this downturn, some REITs may opt to mark up the property’s price by 20% based on their original 2022 acquisition cost. This maneuver results in DST investors being charged $120 million for an asset that, in current market conditions, is worth significantly less at just $80 million.

This example underscores a critical point: Since the REIT is not obligated to acquire the property in a 721 exchange from the DST investors, it can delay or even forgo the transaction if market conditions deteriorate further. In such cases, investors could find themselves locked into a DST investment with inflated valuations and misaligned expectations.

Understanding Valuation and Markups: Crucial Items for 721 UPREIT Investors to Consider

One of the first questions an investor should ask is whether the DST they’re considering has been subject to a markup by the REIT—and if so, by what percentage. Often, these REITs, already in possession of the property, sell it to the DST at a marked-up price that can sometimes exceed 20% (this is often referred to as a Non-Arm’s Length Transaction).

A significant markup can be a red flag, suggesting that the underlying asset may be overvalued and that hidden fees could be eroding potential returns. While such markups are disclosed in the fine print of the private placement memorandum, they are often omitted from the estimated use of proceeds table. This omission makes it challenging for investors to track the true cost basis and understand the complete financial picture, thereby increasing the risk of misaligned expectations over time.

The Critical Role of Expertise in Navigating 721 Exchange UPREITs

Given these complexities, investors must exercise caution and thoroughly assess both the acquisition price that the REIT purchased the property for and the subsequent markups that they are passing along to DST investors. Market conditions are dynamic, and properties that were once market value can quickly depreciate due to economic shifts, such as changes in interest rates. With the REIT’s ability to exercise or not exercise its option at a time of its choosing, the risks associated with overvaluation become even more pronounced for 721 UPREIT DST investors.

Conclusion

The flexibility inherent in 721 UPREIT DSTs, while offering significant benefits, also introduces a layer of risk that must not be underestimated. Investors need to be acutely aware that a REIT’s option but not obligation to acquire a property could lead to situations where market values and marked-up prices could truly impact an investor. This divergence underscores the necessity of due diligence on 721 UPREIT DSTs and investments—ensuring that investors are informed about the markups, the timing of market changes, and the underlying financial risks.

Ultimately, due diligence never guarantees a profitable investment and all 721 UPREIT and DST investments could result in a full loss of principal invested. This is the reason that trying to understand exactly what is going on at the 721 UPREIT DST and the final REIT destination is crucial.

At Kay Properties, we seek to understand these intricate details and to share the implications of them with our investors. Our nearly two decades of experience in the 1031 exchange and 721 UPREIT DST space have taught us that thorough due diligence is the key to making informed investment decisions. Unlike many financial advisors, wealth managers, RIAs, and DST brokers, we delve into the fine print and scrutinize the markups and valuation methodologies that can often be overlooked. Understanding the option but not the obligation—and knowing when and how that option might be exercised—can be the difference between a profitable investment and a costly misstep.

This event is designed for qualified investors who are looking to gain in-depth knowledge from industry experts about how to navigate the 1031 exchange, Delaware Statutory Trust and 721 UPREIT investment space with confidence.

LOS ANGELES, April 3, 2025 /PRNewswire/ -- Kay Properties & Investments, a leading national real estate investment firm specializing in Delaware Statutory Trust (DST), 1031 exchange and 721 UPREIT offerings, announces it will be hosting its Annual Kay Investor Day Conference, on April 23, 2025, in Torrance, California. The event will run from 12 p.m. until 6 p.m. and include lunch and cocktail hour.

The Kay Properties Investor Day Conference will bring together the team of Kay Properties expert DST, 1031 and 721 specialists to share insight with investors on important and timely topics. Also, a number of industry leading DST and 721 UPREIT sponsor companies will be sharing, on multiple panels, their insights, market expertise, and investment strategies with 1031 exchange, DST and 721 UPREIT investors.

"We expect this year's Investor Day to attract hundreds of investors from across the country because it is one of the few events anywhere where investors have the opportunity to hear and meet with some of the nation's top real estate DST and 721 sponsor companies, learn about their strategies, and gain valuable insights into the 1031 exchange, Delaware Statutory Trust and 721 UPREIT landscape," said Dwight Kay, Founder and CEO of Kay Properties & Investments, and architect of the Kay Investor Day Conference.

"It is because of our deep knowledge and direct access to some of the premier DST sponsor companies in the nation that we produce an event like Kay Investor Day Conference. This event will bring all sides of the 1031 exchange, Delaware Statutory Trust and 721 exchange UPREIT equation in a single conference venue including high-net-worth accredited investors, can't miss education on 1031, DST and 721 strategies, and some of the nations top real estate sponsor companies and operators," said Kay.

Kay Investor Day Conference Highlights

• Expert-Led Panel Sessions:
  Attendees will have the opportunity to learn from multiple panel sessions featuring leading DST and 721 UPREIT sponsor companies. These sessions will cover the latest trends, investment strategies, and market dynamics shaping the industry.
• DST Sponsor Company Evaluation Workshops:
  The Kay Properties & Investments team will also host dedicated sessions on how to evaluate and select the right sponsor for their 1031 exchange needs. These workshops will provide a behind-the-scenes look at how Kay Properties & Investments conducts due diligence on DST and 721 UPREIT offerings.
• Exclusive Insights:
  Attendees will also be able to learn about how to utilize the www.kpi1031.com marketplace platform to access 1031 exchange DST and 721 UPREIT offerings, as well as direct cash opportunities, including Opportunistic & Income-Oriented Funds, Real Estate Credit Funds, and NNN Lease Development Offerings.

For Nearly Twenty Years, Kay Properties Has Been Considered a Premier Leader in the DST, 1031 exchange and 721 Exchange Investment Arena

Kay Properties & Investments is considered one of the most sought-after real estate investment firms dedicated to Delaware Statutory Trust and 721 UPREIT investments in the nation. Since its founding nearly two decades ago, Kay Properties has helped thousands of investors complete more than 9,000 DST, 721 UPREIT and 1031 exchange investments.

In addition, what really makes Kay Properties so unique within the real estate investment sphere is the firm's proprietary online marketplace at www.kpi1031.com that allows investors to explore various Delaware Statutory Trust, 721 UPREIT and 1031 exchange investment opportunities throughout the country and including multiple real estate asset classes, including multifamily, build for rent (BFR), industrial, retail, net lease, medical, self-storage and more.

Today, the Kay Properties DST 1031 exchange marketplace platform offers investors access to typically 20-40 DST offerings from over 25 different real estate DST and 721 UPREIT sponsor companies. Within the marketplace, investors can review offering documents, business plans, research and analysis materials, and the risk factors of each 1031 DST and 721 UPREIT investment.

As a result, The Kay Properties DST 1031 exchange marketplace has become a best-in-class platform available for connecting high-net-worth accredited investors with real estate offerings as well as a place for real estate sponsors and operators to connect with thousands of high-net-worth investors seeking to deploy capital into real estate offerings.

• Recently, one large firm was forced to give a large office campus in the Southwest back to lenders after the private investment firm stopped making the payments on its roughly $300 million loan on the office campus.
• One of the nation’s largest real estate investment firms located in the Midwest is struggling with the bitter taste of lender foreclosure after its bank filed a roughly $100 million foreclosure lawsuit against the real estate firm over a recent investment gone awry.
• After failing to repay its loan on a Class B complex in the South, an international investment firm was forced to turn the asset over to the lender.
• One global real estate firm, recently handed back a large East Coast building to its lender after the building’s anchor tenant left the building.
• Fannie Mae recently announced it was prepping for possible losses in the multifamily housing sector as lenders anticipate loan losses from developers and private equity players who used heavy leverage within the multifamily housing sector.
• In the hotel sector, a prominent New York City hotel developer is facing foreclosure after failing to repay a mezzanine loan to a private equity group.
• An upstate New York lender recently announced it was going to move forward with foreclosure proceedings after the owner was unable to make payments on a large self-storage facility near Midtown Manhattan.

1. Debt-Free DST Assets Provide Investors with Zero Risk of Lender Foreclosure.
   DSTs without debt are considered by many to have a much lower risk profile than those with leverage. Debt-free DSTs have zero risk of lender foreclosure, protecting investors from a complete loss of principal invested. Also, debt-free DSTs provide protection from a balloon payment associated with loan maturity, which many real estate firms are very concerned about in today’s market.


2. Debt-free DSTs Give Sponsors More Flexibility to Respond to Unforeseen Circumstances.
   On a leveraged property, many asset management and leasing initiatives require lender approval before they can be executed. This limits the real estate operator in the speed at which they can operate the property and, at times, may limit the options available to them.

In a debt-free DST setting, however, there is no lender that needs to approve an asset management or leasing initiative, so the sponsor has the ability to potentially act quickly on behalf of the property and thereby investors.


3. Debt-Free DSTs Have No Monthly Debt Service to a Lender.
   A leveraged DST has monthly debt-service payments that must be made first and in full each month, allowing remaining funds to be paid out to investors. In economic downturns, an asset’s revenues may be reduced. The equity investors in a leveraged DST bear the burden of this revenue reduction because debt-service payments must still be made, potentially impairing investor monthly distributions.


4. Debt-Free DSTs Provide Investors the Ability to Diversify a Portion of Their Portfolio into Unlevered Assets to Lower Potential Risk.
   Many entrepreneurs who have invested heavily in the stock/bond markets turn to all-cash/debt-free Delaware statutory trust properties as a strategy to diversify away from stocks and bonds. Since these products do not contain the risks of a loan, they are especially interesting to direct cash investors.


5. Debt-Free DSTs Protect Investors From Lender Cash-Flow Sweeps Associated with Tenant Credit-Rating Fluctuations.
   In the event a tenant’s credit rating decreases, under certain loan terms, the lender would have the right to sweep the cash flow until the tenant’s credit rating improves. This is a major risk found in many net lease DST offerings with leverage. In a debt-free DST, if the tenant’s credit rating gets lowered, there is no lender to effectuate a cash-flow sweep, thereby potentially protecting investors’ monthly distributions.

The all-cash/debt-free distribution facility DST offering in Winston-Salem, NC goes full cycle to post total returns of 126.72% for Kay Properties accredited investor

TORRANCE, Calif, May 26, 2022 /PRNewswire/ -- Kay Properties & Investments, which operates one of the nation's largest 1031 exchange investment marketplaces at www.kpi1031.com, announced it had successfully brought one of its custom Kay Properties DST offerings full cycle on behalf of multiple 1031 exchange and cash investors.

Kay Properties & Investments Delaware Statutory Trust Investment Delivers 126.72% Returns to Accredited Investors

"Full Cycle" is the name used to describe a Delaware Statutory Trust property that is purchased and then sold on behalf of a group of accredited investors after a period of time. For example, Kay Properties recently brought this Tacoma Data Center full cycle in similar fashion.

According to Dwight Kay, founder and CEO of Kay Properties & Investments, the Winston-Salem industrial distribution facility DST, sold on behalf of a group of DST accredited investors who, for those investors that closed simultaneously on the DST investment the day that the property was purchased, realized a 126.72% total return, or a 7.19% percent annualized return from their DST 1031 investment*.

"We are proud to have provided another successful custom DST investment opportunity to our clients that resulted in a quality full-cycle return. While past performance does not guarantee or indicate the likelihood of future results, this particular investment is a great example of how Kay Properties' clients have access to custom DST offerings that are exclusively available to investors working with Kay Properties. The DST offering was made available to Kay Properties clients as a custom DST investment in 2018 on our kpi1031.com platform, and successfully went full cycle in 2022. The positive return marks a significant victory for our investors and another successful outcome for the entire Kay Properties team as we approach, God willing, another record-breaking year*," said Kay.

Kay explained that Kay Properties & Investments offered this custom DST to both 1031 Exchange and direct cash investors.  The DST investment included a 30,947 square foot distribution facility that was located in a dense industrial corridor surrounded by numerous distribution-related tenants and just one mile away from Wake Forest University. In addition, the industrial property was 100 % leased to an investment grade tenant with a BBB rating by Standard and Poor's, and was available to accredited investors as an all-cash/debt-free DST offering that provided investors no risk of lender foreclosure.

Chay Lapin, President and DST specialist with Kay Properties & Investments, explained that the combination of a favorable location that was also secured by a long-term lease that was corporately guaranteed by a national tenant, and with an attractive price point per square foot made this industrial distribution facility DST a particularly attractive investment for Kay Properties.

"We originally acquired the Winston-Salem industrial property approximately four years ago because we saw the asset possessed core real estate value with a stable, investment grade tenant, and strategically connected to Smith-Reynolds Airport via a major transportation artery running through the heart of the Winston-Salem sub-market," said Lapin.

The combination of the DST and the QOZ investment successfully helped the family achieve three specific investment objectives:

1. Create a purely passive and management free real estate portfolio with the potential to generate monthly income.

2. Build a significantly more diversified real estate portfolio with assets located across multiple geographic regions, throughout multiple real estate asset classes, and tenanted by multiple business verticals.

According to Dwight Kay, Founder and CEO of Kay Properties, while this transaction involved two separate types of tax deferral strategies, the primary focus was first to complete the 1031 exchange within the required timeframe.

"Because this was a large DST 1031 exchange involving multiple assets, the first thing the Kay Properties team of experts needed to focus on was to identify a number of replacement DST properties that fit into the investor's long-term investment strategy," said Kay.

These included a mix of multifamily, single tenant net lease, and medical that were located across multiple geographic regions, across multiple asset types with different tenants, and multiple DST sponsor companies.

Qualified Opportunity Zone
Following the successful completion of the Delaware Statutory Trust 1031 Exchange, the client then decided to sell the business in a separate transaction and invest in a Qualified Opportunity Zone (QOZ) as an additional tax deferral strategy.

Betty Friant, Kay Properties Senior Vice President is an expert in Qualified Opportunity Zone investment strategies and took the lead on advising the client on how to leverage the benefits of the QOZ vehicle.

"Before the qualified opportunity zone legislation, when you sold a business, you usually couldn't write it off, and you had to pay your taxes. But with Qualified Opportunity Zones, if you have a capital gain from the sale of a business or stocks or other appreciated assets, you can defer the taxes on the gain of that sale and keep the basis to use any way you want. The Qualified Opportunity Zone fund must remain active for at least 10 years for the investor to receive a stepped-up basis on any gain from the opportunity zone project, so it might be possible that no taxes are due on those funds," said Friant.

According to Friant, the ability to convert real estate assets into a tax deferred DST 1031 Exchange, and then convert the gains from the sale of the business into a QOZ is a direct example of why Kay Properties & Investments is considered one of the most experienced and hyper-client-focused real estate investment firms in the nation.

"Very few real estate brokers, CPA's, or even real estate attorneys have as much experience in complicated 1031 Exchanges like this. We always encourage our investors to speak with their CPA and attorney for guidance regarding their particular situation and invite their CPA or attorney to be on the calls with the QOZ sponsor companies to learn more about how the QOZ works. In the end, we often have CPA's and attorneys who personally invest with us on the www.kpi1031.com marketplace when looking for alternative investments that might provide real estate write offs, deductions, and tax deferrals," said Friant.

The 96-page glossy magazine dissects present-day investment themes and explores investment strategies for today's 1031 Exchange and DST real estate investor.

TORRANCE, Calif., April 11, 2022 /PRNewswire/ -- Kay Properties & Investments, a national leader in Delaware Statutory Trust equity placements and in educating DST investors nationwide, announced it recently published its exclusive 1031 DST Digest magazine, a publication designed exclusively for 1031 Exchange and Delaware Statutory Trust investment strategies and education.

According to Dwight Kay, Founder/CEO of Kay Properties and editor of the magazine, the 1031 DST Digest was designed to help educate investors on the DST 1031 Exchange marketplace, while also answering specific questions his firm's team of expert representatives hear from investors daily.

"Inside this accessible magazine, readers will find out what makes Delaware Statutory Trust 1031 investments so popular, how to build a defensive DST real estate portfolio, and how DSTs help investors replace debt in a 1031 Exchange. The magazine is offered free of charge as part of our commitment to providing educational resources to 1031 exchange DST investors nationwide. Request your complimentary copy today and in addition to a print version delivered to your doorstep, you'll also receive instant access to an electronic version of the magazine." said Kay.

People can receive a copy of the limited-edition periodical by going to https://www.1031dstdigest.com.

"The intent of the 1031 DST Digest magazine is to help educate existing and potential clients about DST 1031 properties, the potential benefits and risks of DST investments and whether they might be a right fit for investors considering a 1031 exchange," said Kay.

Specifically, the Kay Properties "1031 DST Digest" will cover topics like :

• How 1031 Exchanges into Delaware Statutory Trust Investments Can Unlock More Quality Time for Investors

• Why Now Might be a Good Time to Sell the Income Property you Love

• What Real Estate and DST Investment Opportunities Should be Considered after the Pandemic recedes?

While today’s rental property owners are facing challenges and pressures they have never seen before, there are alternative investment strategies that should be considered.

By Dwight Kay, Founder and CEO of Kay Properties & Investments

Historically speaking, independent real estate investors, who held for the long-term, walked a relatively straightforward (although bumpy and slow at times) path toward achieving asset appreciation and long-term wealth. This path would often look something like this: an investor would purchase a piece of property that would potentially generate enough cash flow to cover the expenses, including principal and interest on the mortgage, insurance, property taxes, and maintenance costs. Over time, the property would (hopefully) increase in value, income (rents) would rise, and certain tax advantages like the ability to deduct operating and depreciation expenses could be utilized to improve cash flow.

However, the steady march of new government regulations, the impact of COVID-19, and some basic real estate economics have helped some real estate investors recognize that the real estate investments they own have become less profitable and could even worsen to the point where investors could actually be losing money each year.

The Growing Impact of Rent Control Before and After COVID-19

While this may sound like hyperbole to some, our firm is actively working with numerous apartment owners across the country, and we hear first-hand some of the challenges and pressures property owners are facing. Even national media are picking up on this trend. For example, arecent Wall Street Journal article cites that apartment owners and investors are leaving California and the northeast for places like Florida, Texas and the other southern states where the warm weather, business-friendly governments and laws, lower taxes and fewer regulations seem like a breath of fresh air. Reuters recently lamented that beset by COVID-19 and its fallout, many smaller local landlords are offloading their properties and selling to national institutional investors, and CNBC recently reported that at least 60 percent of single-family rental homeowners are owed back rent and are being forced to sell their rental properties to recoup losses. Finally, CBS announced that as a last ditch effort to claw back tens of billions of dollars in unpaid rent, a national group of landlords is suing the Federal government for back rent.

However, even before COVID-19 rolled across the nation’s multifamily rental real estate investment market, landlords were seeing new rent control legislation start to encroach on their investment real estate portfolios, and squeeze owners’ profits. However, when COVID-19 arrived in the United States, cities across the country started expanding rent control laws and eviction moratoriums at an alarming rate, directly exposing landlords to financial peril. Legally speaking, the term “rent control” can be defined as any statutory rule that regulates the timing or frequency of increasing tenants’ rent, the services landlords must provide tenants, and the limited ability of landlords to evict tenants.

Today, multiple cities, states and jurisdictions are under some form of strict rent control regulation, including Washington D.C., Maryland, New Jersey, and New York. Most recently, the states of Oregon and California have enacted statewide rent-control laws that have greatly reduced landlords' ability to raise rental rates. Cities like Santa Ana and St. Paul have both passed bills limiting rent increases to 3% a year. Seattle even passed a bill requiring landlords to pay the moving costs for tenants who can’t afford to stay in their homes, and the City of Los Angeles passed a law that protects tenants from eviction for unpaid rent. Perhaps no other region in the nation is more challenging for landlords than California’s Bay Area. For example, the City of Berkely has had one of the strictest rent control environments in the country capping not only rents, but also garbage and parking fees; Hayward caps rent at just 5 percent and rent increases following voluntary move-outs cannot be more than 5 percent; Oakland’s Rent Adjustment Program (RAP) limits rental increases to 30 percent in a five-year tenancy.

Even more worrisome for landlords, cities like Portland and Oakland have recently created new restrictions that limit the ability of landlords to screen potential tenants, including

• Prohibiting the use of criminal background checks
• Limiting the use of financial background checks
• Requiring landlords to accept of previously evicted tenants
• Limiting security deposits to 1.5 x month's rent

Adding to these growing restrictive rental laws, landlords today must also face the reality of complicated and costly eviction laws and the soaring costs associated with repairs and maintenance.

Finally, many owners are recognizing that perhaps their rental property may not make as much financial sense as it once did. Why is this?Well, for several years now, property values in certain situations have risen faster than an owner’s ability to raise rents. The result is that the cash-on-cash return or “equity yield” gets compressed the higher property values rise. In some cases, this cash-on-cash return can be squeezed from a double-digit return to a low single digit return. Add to this the uncertain factors like inflation and unemployment, higher taxes, and a softening rental market, combined with city and government-imposed rent control and eviction moratoriums and more landlords are coming to the conclusion that now might be potentially a good time to sell their investment real estate.

Enter the Delaware Statutory Trust and Passive Real Estate Investing

So why don’t rental owners simply take their equity positions and cash out? The simple answer because of the tax liabilities, including Federal Capital Gains (15-20%), State Capital Gains (0-13.3% depending on the state he/she lives in), Depreciation Recapture Tax (25%) and the Medicare Surtax (3.8%) will now be due upon sale. These associated taxes could potentially take up to 40 percent of the asset’s sale price out of the seller’s proceeds. However, while it is true that a 1031 Exchange would allow them to defer their taxes, it is also true that they would most likely be limited to exchanging into another multifamily building or a single-tenant NNN building. What’s the problem with these assets? Nothing, except investing in another multifamily building doesn’t offer the owner much diversification, and because the proverbial “3 T’s” of tenants, toilets, and trash will still be involved, there will always be headaches and management expenses involved. A single-tenant net-lease property relies heavily on the quality of that sole tenant, and if that tenant fails, the investor’s income is likely to be reduced or eliminated completely (during COVID-19 there were a number of NNN tenants that went bankrupt or sought rental relief from their landlords). Also, triple net lease properties can be hard to locate, and conducting proper due diligence can be very difficult to accomplish within the time frame of 1031 exchange.

That’s why many landlords are utilizing Delaware Statutory Trust (DST) 1031 Exchanges to exit the active management role of owning rental real estate.DSTs are a form of fractional ownership that can be used to make passive investments in real estate and achieve monthly income potential via ACH direct deposit and diversification across multiple assets. Also, because DSTs are eligible for 1031 Exchanges, investors can sell their investment property and reinvest the proceeds into one or more DST investments while deferring capital gains and other taxes.

Another reason DST investments are popular among real estate investors is because many types of diverse real estate assets can be owned in a DST, including industrial, multifamily, self-storage, medical and retail properties. Also, it is not uncommon to find properties within a DST investment include institutional quality assets like those owned by large investment firms such as a 450-unit Class A multifamily apartment community or a 100,000-square-foot industrial distribution facility leased to a Fortune 500 logistics and shipping company.

In addition, Delaware Statutory Trust 1031 Exchanges offer real estate investors the following specific benefit potential as well:

• The ability to close their 1031 Exchange within typically 3-5 days
• The opportunity to eliminate the hassles of tenants, toilets, and trash (i.e. the Three T’s).
• The potential to receive regular monthly distributions via ACH direct deposits
• The ability to access institutional grade real estate assets
• The potential advantages associated with greater portfolio diversification by geography, tenants, and asset class*

The Bottom Line

Investment properties have gone through significant changes over recent years, and in many cases, owners have been faced with challenges they have never seen before, including the COVID-19 pandemic, and ensuing eviction moratoriums. For qualified property owners who are motivated to sell in the near future and are facing capital gains, reinvesting the proceeds in qualifying properties including DSTs will allow them to not only defer capital gains taxes but also become part of a diversification* strategy with the potential for appreciation and monthly income.

Dwight Kay

Founder and CEO, Kay Properties and Investments, LLC

Dwight Kay is the Founder and CEO of Kay Properties and Investments LLC. Kay Properties is a national 1031 exchange investment firm. The www.kpi1031.com platform provides access to the marketplace of 1031 exchange properties, custom 1031 exchange properties only available to Kay clients, independent advice on sponsor companies, full due diligence and vetting on each 1031 exchange offering (typically 20-40 offerings) and a 1031 secondary market.

After deciding to retire and step away from actively managing a $10 million real estate portfolio, successful medical professional turns to Kay Properties to help evaluate DST properties for his 1031 exchanges.

(Torrance, CA) Kay Properties & Investments, a national leader in Delaware Statutory Trust investments recently helped a retiring physician complete a series of DST 1031 exchanges totaling more than $10 million in order to achieve passive management and greater potential diversification. *

According to Dwight Kay, Kay Properties founder and CEO, the investor was introduced to Kay Properties through his Certified Public Accountant (CPA) who recommended the firm because of their extensive marketplace of DST 1031 property options, their reputation of putting integrity and clients’ interests first, and their nationally recognized expertise in DST 1031 exchange investments.

“After the client contacted us, we spent the next year introducing him to and educating him and his family on DST 1031 exchange investments. We provided him educational material, spent many hours on phone calls with him, and conducted multiple in-person meetings to help him understand how DST 1031 exchanges could potentially help him achieve his investment objectives. As is our practice with all investors, it was important for us to also emphasize the potential risks associated with DST 1031 exchange investments. In the end, our team of DST experts worked with him to create a diversified portfolio of all-cash/debt-free DST properties that potentially met his needs and investment objectives,” explained Kay.

In addition, Kay explained that because of the amount of time his team of hyper-specialized DST experts spent with the client over the course of a year, the client and Kay Properties were able to identify and reserve the exact exchange properties he wanted ahead of time, and successfully completed the exchange within just 5 days of closing on the relinquished property.

According to Kay Properties Vice President and DST 1031 exchange expert, Steve Haskell, the client had spent the past 25 years successfully assembling a multimillion-dollar real estate portfolio of multifamily buildings and single-family homes that he actively managed. However, when he decided to retire to spend more time with his grandchildren and travel the world, he wanted to shift from the day-to-day activities of toilets, trash, and tenants, and enter a passive real estate management structure that would allow him access institutional grade investments while also achieving the potential for regular monthly distributions. In addition, his entire portfolio was heavily concentrated in one submarket, so he also wanted to achieve greater geographic diversification** as well.

“This gentleman was not only a successful physician, he was also a successful part-time real estate professional who had made his wealth locally by doing his own deals and performing his own property management tasks. When it was time for him to retire, he decided to liquidate his portfolio and pursue DST 1031 investments. Plus, from an investment standpoint, he was concentrated in both multifamily and single-family types of assets in a single local submarket. So, we worked closely with him to help create a blended portfolio that included higher quality real estate assets across seven markets nationwide to help him achieve the potential of greater diversification**. And instead of being in a single asset class, we helped him invest into five different asset classes, that included self-storage, medical, industrial, Class B multifamily and manufactured housing.” said Haskell.

However, Haskell feels that as important as the actual transactions, this investor valued the educational process that Kay Properties provided him leading up to his multiple 1031 DST exchanges.

“It really is important that our clients completely understand the DST 1031 structure and the potential risks associated with any real estate or DST investment. In this case, because of the amount of time and education we were able to provide him, this investor was very pleased and appreciative of the Kay Properties business model. We spent the necessary time with him to understand their objectives, goals and risk tolerances and worked tirelessly with him and his CPA to build a 1031 exchange DST solution that would potentially achieve those objectives,” said Haskell.

*Diversification does not guarantee profits or protect against losses.

LOS ANGELES, July 08, 2021 (GLOBE NEWSWIRE) -- Kay Properties is proud to highlight the help they have provided their clients unloading and diversifying their $10 million real estate portfolio over multiple years. The clients, a husband-and-wife team, spent many years self-managing and growing a portfolio of multiple multifamily properties. After learning more about the 1031 exchange capabilities and the Delaware Statutory Trust structure, the clients decided to gradually transition away from active management. They started by selling just one apartment property and, over many years, have sold most of the remaining properties in their portfolio. Through the years they have continued to work with Kay Properties and have utilized the Kay Properties 1031 DST marketplace at www.kpi1031.com.

The Delaware Statutory Trust exchange investments were completed by Kay Properties and Investments team members Chay Lapin, President, and Matt McFarland, Vice President.

Chay Lapin, President, stated, "We are grateful for the long-term relationship we have built with our clients based on years of personalized service to them. Through years and years working with these clients, we have been able to earn their trust and business the same as we have for thousands of other Delaware Statutory Trust investors throughout the United States."

"These particular clients have participated in the Kay Properties DST marketplace over many years and have been able to create a well-diversified portfolio of 20+ DST investments, spanning across many markets and property types. These clients had very little debt on their multifamily properties and were able to remain in a low-leverage situation with their ownership in many Delaware Statutory Trust properties."

Kay Properties offers clients access to the largest selection of debt-free DSTs. Many of these investments are made available exclusively to clients of Kay Properties. The 1031 DST marketplace at www.kpi1031.com also provides an inventory of 20-40 DST offerings from over 25 different sponsor companies, and many of these offerings are leveraged for those needing debt replacement in their 1031 exchange.

Matt McFarland, Vice President at Kay Properties, stated, "It brings us great pride to have the opportunity to work with and develop lasting relationships with so many clients over numerous years. Many of our clients continue to invest in DSTs as they sell their other investment properties and/or continue to exchange with us when their DST investments sell and go full-cycle due to the personalized service that the Kay team has demonstrated year after year. These long-term clients are strong evidence of the fact that DSTs can be a great solution for so many accredited investors who are looking for passive, tax-deferred real estate investments."

Washington-watchers including many of us in the real estate industry are waiting to see if and how federal policymakers change the tax treatment of capital gains and 1031 like-kind exchanges this year.

The capital gains tax rate affects the flow of capital into every investment class, including but not just real estate. Operating companies and operators of hard assets including real estate count on capital and liquidity to be productive. I’m hopeful the current capital gains tax rate will be maintained versus raised as has been proposed.

Meantime, while no one is suggesting that 1031 exchanges of investment property be eliminated, the Biden Administration’s proposed budget for the coming fiscal year would significantly curtail them by limiting the amount of capital gains from investment property sales that could be deferred to $500,000 per year for individuals and $1 million per year for married couples.

1031 exchanges allow property investors to defer capital gains and other tax on investment gains when they reinvest the proceeds into other like-kind properties, which means they must be held for investment or business purposes (meaning you cannot 1031-exchange into a home that you will utilize as your primary residence). Today there is no limit on the amount of capital gains from the sale of investment real estate that can be deferred using 1031 exchanges.

In the face of the tax policy uncertainty, the question is how to think about current real estate investments and future investment plans. First and foremost, the times call for calm. The fact is, real estate has been an attractive alternative investment class and it may continue to be—there are virtually always appealing investment opportunities, be they short or long term. Second, with regard to any change in the capital gains tax rate, it would likely affect all asset classes—not just real estate—so any impact likely would be proportionate, or relatively so.

If you’re holding investment property, should you sell? That’s a question on the minds of many now.

It depends. If you think you’ve realized the full upside potential of the investment and you need the proceeds, it may make sense for you to sell, depending on your personal financial goals and your liquidity.

In contrast, if you’re waiting on an important milestone in your investment’s life, such as some significant improvements to be made, rent increases to be fully realized, or the signing of a major tenant, it may make sense to hold the investment longer. Everyone’s situation is different … there is no single right answer. You’ll have to weigh the fundamentals, including the potential for further appreciation and cash flow from the real estate, versus any immediate change in the tax consequences. Consult your tax and legal advisor, to be sure.

How to invest in real estate given possible limits on 1031 exchanges?

The flipside question of “Do I sell now?” is “How to invest in real estate?” in the current environment.

If the use of 1031 exchanges becomes limited, one real estate ownership structure likely to be even more attractive is the Delaware Statutory Trust (DST). DSTs are a form of fractional ownership that can be a great way to make passive investments in real estate and achieve diversification across multiple assets.

DSTs also happen to be 1031-exchange eligible. In other words, you can sell another investment property and reinvest the proceeds into one or more DSTs in order to defer capital gains tax on the prior gain, and you can sell DST investments and exchange into other investment properties, with capital gains tax deferred, in the future.

DST interests can be divided to be relatively modest investment amounts, so corresponding future gains, if there are gains, would likely be below any thresholds that may be set to qualify for 1031 treatment under the tax code. Similarly, each individual property held in a DST may be sold at different points in time over a number of years, so if an investor diversifies their exchange dollars into small enough allocations, gains in any one year would potentially not exceed whatever limit may be imposed in order to qualify for 1031 treatment.

Many individuals, married couples and family offices invest in real estate DSTs already. Others are looking at the investment type now for the first time as a potential haven in a tax-policy storm. Here’s an example of how a DST investment could work as part of a 1031 tax-deferral strategy right now:

Lisa has a $5,000,000 apartment property that she decides to sell in 2021. There is a $2,000,000 gain on the sale.

She invests the $5,000,000 in 10 different DST investments in $500,000 increments, thus deferring capital gains tax on the original gain. The investments also set her up to potentially defer taxes on future gains, since gains from DSTs are 1031-exchange eligible.

In making the new DST investments, she diversifies her portfolio across different property types and geographies. She also inquires about the holding periods for each of the investments, determining there’s a reasonable likelihood they will be liquidated, with potential gains realized, in different tax years. So she will be in the potential position—in the future—of remaining below any new federal tax cap on the amount of gain that can be deferred in any one year through 1031 exchanges.

There’s no such thing as a crystal ball, so no way to know what Congress will or won’t do this year on tax policy. It’s left to us, including investment property owners and investors, to stay calm and make the best decisions today given what we know now. That applies to the timing of investment property sales, and decisions about how to invest proceeds or cash in commercial and multifamily real estate going forward. Personally, I’m no less excited about real estate investing today than I was last year, and just as excited as I expect to be next year. The appeal of real estate as an investment class is likely to remain. The challenge, as always, is to make the most of opportunities.

Chay Lapin is president of Kay Properties and Investments, LLC, which operates a 1031 exchange property and real estate investment marketplace online at kpi1031.com.

Washington-watchers including many of us in the real estate industry are waiting to see if and how federal policymakers change the tax treatment of capital gains and 1031 like-kind exchanges this year.

The capital gains tax rate affects the flow of capital into every investment class, including but not just real estate. Operating companies and operators of hard assets including real estate count on capital and liquidity to be productive. I’m hopeful the current capital gains tax rate will be maintained versus raised as has been proposed.

Meantime, while no one is suggesting that 1031 exchanges of investment property be eliminated, the Biden Administration’s proposed budget for the coming fiscal year would significantly curtail them by limiting the amount of capital gains from investment property sales that could be deferred to $500,000 per year for individuals and $1 million per year for married couples.

1031 exchanges allow property investors to defer capital gains and other tax on investment gains when they reinvest the proceeds into other like-kind properties, which means they must be held for investment or business purposes (meaning you cannot 1031-exchange into a home that you will utilize as your primary residence). Today there is no limit on the amount of capital gains from the sale of investment real estate that can be deferred using 1031 exchanges.

Should you sell investment property now?

In the face of the tax policy uncertainty, the question is how to think about current real estate investments and future investment plans. First and foremost, the times call for calm. The fact is, real estate has been an attractive alternative investment class and it may continue to be—there are virtually always appealing investment opportunities, be they short or long term. Second, with regard to any change in the capital gains tax rate, it would likely affect all asset classes—not just real estate—so any impact likely would be proportionate, or relatively so.

If you’re holding investment property, should you sell? That’s a question on the minds of many now.

It depends. If you think you’ve realized the full upside potential of the investment and you need the proceeds, it may make sense for you to sell, depending on your personal financial goals and your liquidity.

In contrast, if you’re waiting on an important milestone in your investment’s life, such as some significant improvements to be made, rent increases to be fully realized, or the signing of a major tenant, it may make sense to hold the investment longer. Everyone’s situation is different … there is no single right answer. You’ll have to weigh the fundamentals, including the potential for further appreciation and cash flow from the real estate, versus any immediate change in the tax consequences. Consult your tax and legal advisor, to be sure.

How to invest in real estate given possible limits on 1031 exchanges?

The flipside question of “Do I sell now?” is “How to invest in real estate?” in the current environment.

If the use of 1031 exchanges becomes limited, one real estate ownership structure likely to be even more attractive is the Delaware Statutory Trust (DST). DSTs are a form of fractional ownership that can be a great way to make passive investments in real estate and achieve diversification across multiple assets.

DSTs also happen to be 1031-exchange eligible. In other words, you can sell another investment property and reinvest the proceeds into one or more DSTs in order to defer capital gains tax on the prior gain, and you can sell DST investments and exchange into other investment properties, with capital gains tax deferred, in the future.

DST interests can be divided to be relatively modest investment amounts, so corresponding future gains, if there are gains, would likely be below any thresholds that may be set to qualify for 1031 treatment under the tax code. Similarly, each individual property held in a DST may be sold at different points in time over a number of years, so if an investor diversifies their exchange dollars into small enough allocations, gains in any one year would potentially not exceed whatever limit may be imposed in order to qualify for 1031 treatment.

Many individuals, married couples and family offices invest in real estate DSTs already. Others are looking at the investment type now for the first time as a potential haven in a tax-policy storm. Here’s an example of how a DST investment could work as part of a 1031 tax-deferral strategy right now:

Lisa has a $5,000,000 apartment property that she decides to sell in 2021. There is a $2,000,000 gain on the sale.

She invests the $5,000,000 in 10 different DST investments in $500,000 increments, thus deferring capital gains tax on the original gain. The investments also set her up to potentially defer taxes on future gains, since gains from DSTs are 1031-exchange eligible.

In making the new DST investments, she diversifies her portfolio across different property types and geographies. She also inquires about the holding periods for each of the investments, determining there’s a reasonable likelihood they will be liquidated, with potential gains realized, in different tax years. So she will be in the potential position—in the future—of remaining below any new federal tax cap on the amount of gain that can be deferred in any one year through 1031 exchanges.

There’s no such thing as a crystal ball, so no way to know what Congress will or won’t do this year on tax policy. It’s left to us, including investment property owners and investors, to stay calm and make the best decisions today given what we know now. That applies to the timing of investment property sales, and decisions about how to invest proceeds or cash in commercial and multifamily real estate going forward. Personally, I’m no less excited about real estate investing today than I was last year, and just as excited as I expect to be next year. The appeal of real estate as an investment class is likely to remain. The challenge, as always, is to make the most of opportunities.

LOS ANGELES, July 02, 2021 (GLOBE NEWSWIRE) -- Kay Properties is pleased to announce the completion of a three-phased 1031 exchange project resulting in an investment into over $130 million of Delaware Statutory Trust (DST) properties.

Over the course of multiple months, Kay Properties President Chay Lapin and Vice President Steve Haskell helped a family-owned real estate firm navigate three complex 1031 exchanges into a highly diversified portfolio of DST properties.

In the summer of 2020, the family-owned real estate firm began liquidating their portfolio of six large multifamily properties. The Kay Properties team worked closely with the client’s legal counsel, real estate brokers, qualified intermediary and many Delaware Statutory Trust sponsor companies to execute a smooth and swift series of transactions.

“This 1031 exchange into Delaware Statutory Trust properties was highly nuanced in its own right,” said Steve Haskell. “There were multiple DST properties, several different legal entities, and a lot of moving parts. On top of it all, the COVID pandemic added an additional level of complexity. We are grateful for the strong relationships we enjoy with the DST sponsor companies as well as are pleased to have provided such highly personalized service to these very large and sophisticated real estate clients.”

The clients ultimately invested in over 44 Delaware Statutory Trust offerings comprised of 57 individual properties in over 15 states. Almost all the client’s real estate wealth was initially concentrated in a single asset type in one real estate market. The investor sought out the Kay Properties team for their vast network and extensive experience in the 1031 exchange and DST industry.

Kay Properties President Chay Lapin stated, “I am especially pleased with our ability to help our clients close on such a large amount of Delaware Statutory Trust real estate investments in just three business days after closing on their relinquished property. This saved our client hundreds of thousands of dollars in missed rental income opportunity.”

“I highly believe that only with the extraordinary focus and sophistication that the Kay Properties team brings to the table could such a complex transaction be completed with such distinctively attentive and personal service,” Lapin added. “Personalized service is one of the many reasons that thousands of 1031 exchange investors nationwide have opted to purchase Delaware Statutory Trust investments through Kay Properties and the www.kpi1031.com marketplace.”

Recent survey research by National Real Estate Investor magazine indicates that nearly 60% of high-net-worth investors are expected to increase their allocation to investment real estate in the next 12 months. Millions of Americans invest in alternative assets, including real estate. It’s an important step towards diversifying a portfolio with investments that don’t necessarily correlate with the stock or bond markets.

Once you decide to invest in real estate, the challenge is how to build a diverse portfolio.

Buying a property outright and actively managing it yourself is one way to participate in the market, but that typically requires a substantial initial investment — often hundreds of thousands of dollars to be paid at once. A downside of this approach is that you put all your eggs in one basket.

LOS ANGELES, Aug. 10, 2020 (GLOBE NEWSWIRE) -- Kay Properties and Investments today announced that one of their custom 1031 exchange Delaware Statutory Trust (DST) offerings has gone full cycle and was sold on behalf of investors. The offering was a multi-tenant office property located in the Tampa, Fla. MSA and was made available exclusively to Kay Properties clients in 2017.

The offering generated a total return of 131.42% for the 1031 exchange and direct cash investors.* This DST offering was a custom 1031 DST offering made available only to Kay Properties clients who were accredited investors under Regulation D Rule 506(c).

Dwight Kay, CEO and Founder of Kay Properties, commented, "We are extremely pleased with the opportunity to provide these returns for our investors in light of the COVID-19 pandemic and the headwinds facing multi-tenant office properties. The investment was opportunistic in nature as we were able to generate a risk-adjusted return for our investors without utilizing leverage. The offering was a debt-free DST and we are proud to say that the returns have proven on this offering to be superior to many leveraged DSTs that were available during the same time period.* Many of the 1031 investors involved in this DST offering decided to complete another 1031 exchange investment with Kay Properties via the www.kpi1031.com marketplace for 1031 exchange offerings and we are thankful for the opportunity to be of service to them and their families."

Chay Lapin, Senior Vice President of Kay Properties, said, "Our property located in the Tampa, Florida MSA allowed our investors to be in a debt-free position to mitigate risk and have potential for upside at the same time. We are very pleased to provide our investors a positive total return on their investment, especially during a global pandemic. During the beginning of the global crisis and economic issues the investors were able to sleep at night knowing at the end of the day they were debt free should the various world events affect their property, there was no risk of lender foreclosure."

Jason Salmon, Senior Vice President and Managing Director of Real Estate Analytics, added, "I'm pleased that our investors were able to participate in a real estate deal that resulted in a profitable sale with monthly income along the way. Most of our clients in this DST investment offering had invested in multiple DSTs with multiple DST sponsor companies as part of a diversified strategy, and similarly in this case, the clients opted to 1031 exchange their sale proceeds into additional DST real estate."

Betty Friant, Senior Vice President of Kay Properties, concluded, "This lends even more credence to our recommendation that if investors are debt free when they sell a property in a 1031 exchange, they should try to remain debt free. It takes a big layer of risk out of the equation when investing in real estate as it's extremely hard to lose a property to foreclosure if there is no bank involved! In addition to DST 1031 properties that have leverage associated with them, Kay Properties also has a number of debt-free DST properties available in asset classes such as multifamily, industrial distribution centers, medical office, and retail/pharmacy.  Investors can see our current offerings by creating a free account at www.kpi1031.com, our online marketplace for 1031 exchange offerings, or by calling (855) 899-4597."

*Past performance does not guarantee or indicate the likelihood of future results. 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.

*The total return represents the total sales proceeds and distributions through the life of the asset, net of fees. No representation is made that any investment will or is likely to achieve profits or losses similar to those achieved in the past or that losses will not be incurred on future offerings.

LOS ANGELES, July 16, 2020 (GLOBE NEWSWIRE) -- Kay Properties and Investments today announced the completion of multiple 1031 DST exchanges for owner-operators of real estate who are currently in the winding down phase of their investment career. The 1031 exchange clients utilized the Kay Properties 1031 DST marketplace at www.kpi1031.com for a number of months to educate themselves on how DST 1031 properties for sale would potentially fit within their portfolio.

The Delaware Statutory Trust 1031 exchange investments were completed by Kay Properties and Investments team members Betty Friant, Senior Vice President, and Orrin Barrow, Vice President.

Dwight Kay, the founder and CEO of Kay Properties, stated, “Many investors are at the point in their lives where they are no longer looking to deal with the notorious three T’s — toilets, tenants and trash. They have built their wealth through methodical and savvy purchasing of real estate. Now they are looking for 1031 exchange alternatives and investment vehicles to be able to defer their taxes while also purchasing quality real estate that is passive. This is where the kpi1031.com marketplace fits in. We are a comprehensive 1031 DST marketplace that works on behalf of our clients to match them with quality DST offerings and DST sponsors to create a truly diversified 1031 portfolio.”

Betty Friant, Senior Vice President of Kay Properties, added, “The clients stated early on in conversations that they were considering other individuals that had knowledge of 1031 exchange opportunities. However, once the client was able to access our personnel and kpi1031.com platform, he decided that Kay Properties was the obvious choice for his DST 1031 investments. Our client was looking for transparent knowledge about the DST 1031 industry as well as the past performance of many asset managers and DST sponsor companies in the industry.”

“We have the connections and knowledge of the DST 1031 sponsor industry that allowed for us to have comprehensive conference calls with DST sponsor companies and key personnel to help educate our clients on the marketplace and how many of the DST sponsors operate. Our expertise, network and many years in the DST 1031 investment industry has allowed us to be considered by many to be the leading 1031 DST investment company in the country.”

Orrin Barrow, Vice President of Kay Properties, stated, "At Kay Properties, we take the time and have the team and expertise to be able to craft a portfolio of DST investments based on each investor’s needs, requests and criteria. As of July 2020, we have helped these clients complete roughly $3.1 million of DST 1031 investments. This exchange was the beginning of a series whereby they have roughly $50 million of real estate they are looking to exchange over the next few years. They retained our firm because of our comprehensive kpi1031.com platform, our expertise in the DST 1031 marketplace and our attention to detail as it pertains to their very specific financial situation.”

Many syndicated real estate investments miss out on a major tax benefit, but there are some ways to do your deal that avoid that issue.

The rise in online real estate investing in recent years has been remarkable. As the global consulting firm EY estimates, the online real estate investing market worldwide is expected to be $8.3 billion in 2020, with no sign of slowing.