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BEFORE INVESTING, KNOW YOUR
IDEBT STRUCTURES
Kay Properties and Investments, LLC
nvestors who are investing in real property to investors but high cash flow is only attractive through 1031 Exchanges or investing after- until it is not... and this is where investors need tax dollars will need to consider investing into to understand how the higher cash flow is being property that has a mortgage or property with achieved and the risks associated with it. We no long-term financing (e.g., Debt-Free). For typically have seen sponsors use interest only clients in a 1031 Exchange transaction under financing in order to get a higher potential cash the current Internal Revenue Code, a property flow, but one risk is the large balloon mortgage
with existing debt may need to replace the debt payment that will eventually become due. There
obligation to fulfill the equal or greater purchase price for 1031 Exchange requirements.
We have found through the years that investors may not actually understand the various debt structures that they are investing into and that each loan may have different terms and agreements. There are pros and cons of various types of debt.
CASH FLOW
Often, cash flow can potentially be higher when investors use a debt within their investment strategy. High cash flow can be very attractive
would be no principle paydown in the loan and investors could potentially be stuck with a large loan balance that they will need to replace in their future 1031 Exchange.
CROSS COLLATERALIZED LOAN OBLIGATIONS
Within the Delaware Statutory Trust or “DST” marketplace you will find that there are DSTs that have a single asset and there are DSTs that can have upwards of 20+ properties within them. It is important to understand the loan structure when considering investing into a DST with multiple properties that has a debt component. There
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BY DWIGHT KAY
Chief Executive Officer
Kay Properties and Investments, LLC is a national Delaware Statutory Trust (DST) investment firm with offices in Los Angeles, San Diego, San Francisco, Seattle, New York City and Washington DC. Kay Properties team members collectively have over 94 years of real estate experience, are licensed in all 50 states, and have participated in over $7 billion of DST real estate. Our clients have the ability to participate in private, exclusively available DST properties as well as those presented to the wider DST marketplace; with the exception of those that fail our due-diligence process. To learn more about Kay Properties please visit: www.kpi1031.com Call: 1-855-899-4597 or email: info@Kpi1031. com
CS-14 JUNE 2021 - APARTMENT MANAGEMENT MAGAZINE