- Flexibility – Without leverage, the DST sponsor has flexibility to hold a property through any potential market downturns, credit crunches, recessions or even depressions. This flexibility provides a greater likelihood for investors that a property will be sold at the most advantageous timing, rather than when a loan is due.
- Diversification – Debt-Free DSTs provide a way to diversify a 1031 exchange across Loan -to-Values (LTV’s) as well as asset classes.
- Added Security – Investors can protect themselves from a catastrophic outcome of lender foreclosure and complete loss of invested capital.
- No Refinancing Risk – Investing in a debt-free DST eliminates refinancing risk.
- Consistency – 1031 Exchange rollover investors must match or increase their debt position with each subsequent 1031 exchange. Depending on market fluctuations, investors may be stuck with a 65% LTV rollover at a point when similar leveraged products do not exist. Keeping some or all of your 1031 exchange at 0% LTV gives investors more potential options upon exit.
- Accessibility – These types of investments are available for accredited cash investors looking for exposure to real estate, even if the funds are not part of a 1031 exchange.
All private placement and DST property investments involve risk, including illiquidity, and the potential loss of some or all monies invested. Please seek the guidance of a knowledgeable financial professional prior to making an investment decision.