Debt Free DSTs

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By The Cove Capital Investments, LLC Team

When purchasing investment real estate, it is common to use leverage (debt) as a tool for the acquisition of the property. Your first piece of real estate may have been a house or small rental property purchased with a 30-year mortgage, that over time you have paid down the principal balance to zero. Now that you are selling the property and doing a 1031 exchange, and with rates as low as they are, you may be advised by many, that tout the benefits of using debt (increased purchasing power, increased tax write offs and efficiencies, etc.) to purchase more real estate through the use of another mortgage.  This may be appropriate for some investors, however for many of our clients at Cove Capital, they are at a point in their lives where they do not want to be mentally, physically and economically be burdened with the added risk of increased leverage and more mortgages. 

Investors that are at or near retirement are wise to not drastically increase their risk potential by investing in properties with multi-million dollar 10-year balloon mortgages.  Do you want to be ten years older than you are today and be forced into a situation where you have to purchase equal or greater value in your next 1031 exchange and therefore be forced to continue to use leverage to defer your capital gains taxes?  Many of Cove Capitals clients do not want this extreme burden and therefore choose to purchase Cove debt free DSTs in the multifamily, self-storage and net lease asset classes.

Debt-free multi-family, self-storage and net lease DSTs exist as way to 1031 exchange into product that has a higher price range without needing to use leverage. Through fractional DST ownership you can invest your share without the worry of mortgage payments – completely debt free without an ounce of leverage or mortgages. The cherry on top on these types of investments is that a DST is fully managed for the investor by Cove Capital, acting as the DST sponsor company which is also known as the asset manager. This means no tenants, toilets or trash to worry about. 

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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. This email contains information that has been obtained from sources believed to be reliable. However, Cove Capital Investments, LLC, and their representatives do not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment.  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. This material is not intended as tax or legal advice.

There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) properties and real estate securities including illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family 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. For an investor to qualify for any type of investment, there are both financial requirements and suitability requirements that must match specific objectives, goals and risk tolerances.

Securities offered through FNEX Capital, member FINRA, SIPC.