DST 1031 Exchange
Are you thinking about executing a 1031 exchange?
You may want to consider utilizing a Delaware Statutory Trust (DST) for your replacement property. Replacement properties structured as DSTs have become a popular vehicle for 1031 exchange investors for a number of reasons and we’re here to help you understand why.
Benefits of a DST
A DST is a unique structure because it allows multiple investors to purchase fractional ownership in an institutional quality asset.
DST Scenario
DST 1031 Exchange offers a unique multiple investor structure.
1. No Management Responsibilities
Relieve yourself of the hassles, headaches and responsibility of managing properties. Investors benefit from professional real estate expertise provided through the DST structure. They will take care of the acquisition, financing, property management and asset management.
2. Monthly Cash Flow Potential
Most DST investments are designed to provide cash flow on a monthly basis to investors.
3. Limited Personal Liability
If the DST has leverage, the loans are non-recourse to the investor. This means they should not impact the ability of the investors to secure future loans.
4. Fractional Ownership
Because investors are buying a fractional ownership, the dollar amount of replacement property can be lined up with the amount of relinquished property. Additionally, fractional ownership makes it easy to use a DST as a part of an exchange. For example, if an investor finds direct real estate for a portion of their exchange they can use a DST for the remainder.
5. Estate Planning
As with all 1031 exchange investments, under the current tax law, beneficiaries will receive a step up in basis upon the death of the investor. Additionally the DST provides heirs with professional real estate management rather than the complications of hands-on management, which can be further complicated by multiple heirs.
6. Access to Institutional-Quality Property
The fractional ownership structure of DSTs allows investors the opportunity to invest in multi-million dollar, institutional-quality properties that would be out of reach for most real estate investors. Additionally, these investments have gone through thorough due diligence.
7. Diversification
Because of the low investment minimums (often times as low as 100K), investors can divide their investment into multiple DST offerings. This allows investors an opportunity to diversify their investment geographically, by property type and by sponsor.
Hypothetical Illustration of $1,000,000 Allocation
Diversified with Different Asset Types
DST 1031 exchange investments offer the benefit of diversification.
DST Risks to Consider
While DSTs are a very popular and often appropriate investment vehicle for 1031 exchanges, they are also not for every investor. DST risks to consider include but are not limited to: the actual amount and timing of distributions is not guaranteed and may vary. In addition, investors’ capital is not guaranteed. These investments are generally not liquid and may have declining market values and tenant vacancies. Therefore, investors must carefully consider their overall financial situation prior to investing.
Get Started
In a 1031 exchange scenario, we at Chicagoland 1031 Exchange, will first help you determine which investment approach and options make sense for your unique situation. If, after our guidance and education, you choose to pursue a DST, we will provide you with access to investments from a number of sponsors who offer replacement properties structured as Delaware Statutory Trusts (DST). Together, we will review a variety of potential replacement properties—including triple net, Multi-family, office, retail and medical properties, and more—and we will help you select a replacement property(s) that fulfills your exchange requirement and is in line with your financial goals.
If you are looking for an exchange replacement in excess of $3 million, please reach out to us directly for customized offerings.
Are you ready to talk?
Whether you're thinking about selling a property and want to better understand the 1031 exchange process and investment choices, or if you already sold your property and the proceeds are currently held at a Qualified Intermediary, we can help.
Please call us at (224) 245-5281 or schedule an introduction today.
Chicagoland 1031 Exchange proudly serves clients nationwide, including California, Illinois, Florida, Colorado, Massachusetts, and more.
The information herein has been prepared for educational purposes only and does not constitute an offer to purchase or sell securitized real estate investments. Such offers are only made through the sponsors Private Placement Memorandum (PPM) which is solely available to accredited investors and accredited entities. DST 1031 properties are only available to accredited investors (typically have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two years, and reasonably expects the same for the current year) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and Attorney. There are risks associated with investing in real estate and Delaware Statutory Trust (DST) properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies and illiquidity. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Because investor’s situations and objectives vary this information is not intended to indicate suitability for any particular investor. This material is not to be interpreted as tax or legal advice. Please speak with your own tax and legal advisors for advice/guidance regarding your particular situation.
This site is published for residents of the United States only. Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all services referenced on this site are available in every state and through every advisor listed. For additional information, please contact Nathan Kuhn at 224-245-5281.
Chicagoland 1031 Exchange does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstances.
Securities offered through DAI Securities, LLC, member FINRA / SIPC. Advisory services offered through Kuhn Wealth Management, Inc. (KWM), a state registered investment advisor. Insurance offered through DAI Securities, LLC. KWM dba Chicagoland 1031 Exchange is independent of DAI Securities, LLC.
