Four Reasons Why 1031 DST Exchanges are Growing in Popularity

Deferral of Capital Gains Tax- This is the primary reason why real estate investors use 1031 exchanges. After selling a real estate property, investing in a like-kind property allows the owner to defer their capital gains tax. One DST benefits that has caught the industry’s attention is their prepackaged structure. This allows investors to close DST business deals in potentially as little as 3-5 business days. This time frame easily fits within the mandatory 45-day identification deadline and 180-day closing deadline.

Potentially increased cash flow- When conducting a 1031 exchange, property owners calculate the cash-on-cash return they receive from their current property. From our observations at Kay Properties, we speculated in 2015 that DSTs have a projected cash-on-cash return between 5-8%. These potential benefits are gaining notice from the real estate community and driving up its demand.

Increased Diversification- Real estate owners often have a large amount of equity in a single property. However, many investors have become increasingly wary of placing all of their capital in one property. This is the real estate equivalent of placing all of one’s retirement savings in a single stock. DST properties provide investors the option to acquire several portions of many different properties. Diversifying a real estate portfolio by selecting properties in various businesses and locations reduces, but does not eliminate, the risk of investment loss.

Passive ownership- Investing in a DST allows you to transfer everyday management tasks to the property’s tenant. This allows DST owners to redirect this time towards family and other passions, while still potentially reaping the benefits of the investment.

To learn more if a 1031 DST exchange is right for you, sign up today: www.kpi1031.com

DST properties and private placement real estate offerings are for accredited investors (a net worth of greater than 1 million dollars – exclusive of primary residence) and accredited entities only. If you are unsure if you are an accredited investor or an accredited entity, please do speak with your CPA and attorney for verification prior to considering an investment. There are material risks associated with the ownership of real estate, real estate offerings and Delaware Statutory Trust (DST) properties, including but not limited to, tenant vacancies, loss of entire principal amount invested, and that distributions, potential cash flows, returns, and appreciation are not guaranteed. There are no assurances that diversification will produce profits or guarantees against loss. This material does not constitute tax or legal advice. All investors should speak with their own tax and legal advisors before considering any real estate investments.

Securities products offered through Growth Capital Services, member FINRA/SIPC. Kay Properties and Investments, LLC is independent of Growth Capital Services. All information provided is for educational purposes only. The material contained herein does not constitute an offer to sell and is not an offer to buy real estate, real estate offerings, DST properties or securities. Such offers are made only by a sponsor’s memorandum, which is always controlling and available to accredited investors and accredited entities only. There are material risks associated with the ownership of real estate, real estate offerings and DST properties, including but not limited to, tenant vacancies, loss of entire principal amount invested, and that potential distributions, cash flows, returns, and appreciation are not guaranteed.

All information herein has been prepared from sources believed to be reliable, but is not guaranteed by Growth Capital Services and Kay Properties and Investments and is not a complete summary or statement of all available data necessary for making an investment decision. Any information provided is for informational purposes only and does not constitute a recommendation.