1031 DST's experience? Tax risk?

[Kate Marin]

I am 3.5 weeks from my 45th day. IWas going to put 1/2 my funds in a condo (all cash no debt) and 1/2 in a diversified DST portfolio (5 DST's) each about $100k. The DST's are convenient because the debt is non recourse (no applications) and matched 50% LTV paying 5-5.5% cap. I have to do something to carry the $620k debt for the exchange to work and this covers it.

1) anyone have experience with these? (I know there is a fair bit of Load and not an ideal investment if I weren't needing to park my debt somewhere).

2) it's illiquid for 10 years then rolled into another or cash out whichever I choose.  Since I would owe over $400k to IRS want to make sure on going tax deferral in this mechanism is a sure thing. Thoughts? 

Thanks,

Kathy 

[Dave Foster]

@Kate Marin a lot of folks go that route. And what makes the DST so attractive is the non-recourse debt. Fees, holding periods and sub par returns can make them less attractive. So a good search from multiple providers is important.

I really like your plan of separating cash and debt. You'll sleep well having that condo debt free. You could also go one step further with your fractional purchase and use the remainder of your cash to buy a debt free DST or TIC. Then use all debt for a zero coupon DST. These give you no cash return but at the end of the note you own the property. One more way to distance yourself from the risk of leverage controlled by others.