NET LEASE & DST INVESTMENTS
Many Apartment owners, at some point in their investing life, grow tired of the intensive management required in owning apartments. Selling and cashing out is an enticing option but many investors do not want to pay the capital gains tax.
The next best alternative for an investor is a 1031 Tax Deferred Exchange into either a triple-net (NNN) leased investment property or into a Delaware Statutory Trust (DST) fractional ownership structure.
NNN investments typically involve a retail or industrial property, leased on a long-term basis to a credit-worthy tenant. The tenant is responsible for payment of all expenses including taxes, utilities, and building maintenance: The owner receives a “net” check every month (often, referred to as “mailbox money”). Cap rate and the return on investment will vary depending on the credit worthiness of the tenant and location of the asset. Prices typically range for $2 to $15 million.
DST’s are offered for the most part as securities through a broker dealer network and an investor must meet the “accredited investor” criteria. The typical property types currently offered by DST Sponsors are multifamily, single tenant triple net leased properties or portfolios, medical office buildings, industrial and self-storage facilities. The DST’s come “prepackaged” where the equity requirement and loan amounts are known allowing an investor to find the loan to value (LTV) which matches up most closely to the investors net sale proceeds and existing loan balance (if any) from their sale property.