Frequently Asked Questions

1031 Exchange Questions

Frequently asked questions about 1031 Exchanges and Delaware Statutory Trusts

What is an "Accredited Investor?"

As defined by the SEC, an accredited investor is an individual who has either a $1 million net worth excluding their primary residence or $200,000 of income individually or $300,000 joint income for each of the last two years with a reasonable expectation for the same in the current year.

How long are DSTs held?

DSTs are held for anywhere between 3 – 10 years. Should investors want to exchange out of the property, conservatively, the DST property should be held for a minimum of two years. Typically, the DST loan’s prepayment penalties become palatable after year 3. DSTs with debt in place are not allowed to refinance, as such with 10-year fixed rate commercial debt, 10 years becomes the maximum hold period.

Can I sell my DSTs at any time?

Should you be interested in selling your position in a DST, there is a mechanism to do so. However, it cannot be guaranteed that you will be able to sell the DST investment, nor receive your entire investment back unless the market conditions support it.

Are DSTs returns guaranteed?

DST ownership is very much direct ownership of investment real estate. Therefore, returns are not guaranteed. There are certain offerings that focus on the predictability of potential income, such as net lease offerings, due to the duration of the lease and the fact that the leases are corporate guaranteed. However, DSTs returns are never completely guaranteed.

What happens after a DST property sells?

Once a DST property sells, all DST investors will receive their pro-rata share of the sales proceeds consistent with their initial investment, including any potential appreciation. At that time, investors will have the option of either exchanging into more DSTs, exchanging into any other investment property, paying tax, or a combination of.

What makes your firm unique?

Our extensive industry experience, both in the real estate and securities world, coupled with our emphasis on education, focus on client’s objectives and rigorous DST sponsor and replacement property due diligence.

Can I speak to your previous clients?

Absolutely. Hearing from our previous clients is a great way to gain insight into our client focus, process and the replacement properties we have recommended in the past.

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 Sponsor’s Private Placement Memorandum (PPM) which is solely available to accredited investors and accredited entities. DST 1031 properties are only available to accredited investors (generally described as having a net worth of over $1 million dollars exclusive of primary residence) 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 material risks associated with investing in DST properties and real estate securities including liquidity, 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, potentially adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk. Because investor 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.

Securities offered through Aurora Securities, Inc. (ASI), member FINRA/SIPC. Advisory services through Secure Asset Management, LLC (SAM), a Registered Investment Advisor. ASI and SAM are affiliated companies. Real Estate Transition Solutions (RETS) is independent of ASI and SAM. To access Aurora Securities’ Form Customer Relationship Summary (CRS), please click HERE. For Secure Asset Management’s Form CRS, click HERE. Real Estate Transition Solutions, ASI, and SAM do not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstances.

Client examples are hypothetical and for illustration purposes only. Individual results may vary.

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 through every advisor listed. For additional information please contact 888-755-8595 or email info@re-transition.com.