The Debt is Handled
One of the requirements for a 1031 exchange is to take on "equal or greater debt" in the replacement property to what you had in the property you are exchanging. A DST takes the headache out of arranging financing and already has non-recourse financing set up for you.
The DST secures non-recourse financing at favorable terms.
The DST sponsor leverages their strong lender relationships to obtain financing terms investors would most likely not be able to obtain on their own.
The DST assigns the pro-rata share of debt to the investor.
The DST assigns the benefits of the debt but retains the obligations. The debt is non–recourse to the investor. The investor does not need to qualify for the debt personally.
Investors can relax and know the debt is handled!
Investors fulfill their debt requirements without the headache associated with qualifying for and being liable for the debt obligations.
Still have questions? Call 844.533.1031