DSTs: What Are Delaware Statutory Trusts??
JLM Real Estate JLM Real Estate
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 Published On Jun 15, 2023

What Are Delaware Statutory Trusts? Also Known As DST. Learn the benefits of DSTs as we outline who DSTs are best fit for, eligibility, and timeframes. The benefits of investing in DSTs are discussed, including the higher likelihood of distributions and several properties available for investment.

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Translation: "There's a law in California that Kings Barn is taking advantage of. That allows us to pay a real estate commission for DST shares as long as you're a California real estate broker and the investors in California. All right. So it's very exclusive to California. But lucky, luckily for us, California is a pretty big market, right? There's a lot of transactions going on. So as far as DST sponsors in the entire country, Kings Barn is not the biggest player because we only operate in California, but we're still a top 10 DST sponsor. What A DST is and how Kings works as a DST sponsor. So DST is a Delaware Statutory Trust what that is. And it's, I don't expect you guys to become experts on DSTs but if you know enough to be dangerous on the phones and kind of get people interested and that's really all you need, right? You get someone's interest, you can kind of get them to take that next step as far as staying down on a meeting with you guys, a meeting with us myself and you so that they talk about listing their property and potentially exchanging with DST or exchanging to something else. But a DST it's very similar to like a family trust and that, that kind of helps resonate with investors because most of them have properties that they own in a family trust. But it's similar to a family trust in that Kings Barn is the trustee of the trust and investors are the beneficiary of the trust. The difference is it's the only type of entity that you can change into purchase a fractional share of that entity. So if the IRS says that as long as the trust, the Delaware Trust owns real property, then it for a 10 31 exchange through the DST, you get all the same tax benefits of traditional real estate. So the questions that most DST investors will have is like pass away and what's gonna happen? They'll still get a step up basis. What kind of tax benefits do I have? If I go to a DST, you have all the same tax benefits that you will real estate. And for most of the people, especially the potential clients that you're talking to on the phone, they're older clients and they probably own a property that they had for a long time. They probably paid off most of it. Not all of the debt, they may have fully appreciated the asset. So they don't really have the tax benefits that they would have from a newer property. So by exchanging some of their properties and exchanging into anything, they're going to get a lot of tax benefits and they'll get those same benefits for the so they can sell their property that has a very low cost basis, most of our properties. So most DSTs in general are leveraged to some degree. So kind of taking a step back, right? Your client 1031 exchange, they have to replace the equity and the debt in their exchange. So for some people right now, that can be a problem because they're selling their properties, they have a debt that they have to replace, but they're 80 years old, they don't have any income coming in other than the property that they're selling, which is pretty minimal. So they probably won't be able to get approved for much of a loan right, to replace the down there exchange by going into a DST because the debt is already on the property. They don't have to worry about that. There's no financing involved. They can close the property in a matter of days. So, like we have clients who close escrow on Monday and their down lake and they close it with us by Friday. So it's very quick. It's very simple. It's easier for you guys. It's easier for them. And for a lot of people who are potential clients, it's good for them because"

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