MB 245: Bring in 1031 Exchange Investors with the DST – With Paul Moore

<p>As syndicators, we’d love to work with 1031 exchange investors more often. But the rules make it really, really difficult! It means taking on co-owners (rather than passive investors) and big bucks in legal fees. What if there was an EASIER way to work with 1031 exchange investors? A way that allows them to invest passively in syndication deals, defer their taxes and earn a stable return?</p> <p>Paul Moore is Managing Partner at <a href= "https://www.wellingscapital.com/" target="_blank" rel= "noopener">Wellings Capital</a>, a firm dedicated to helping high earners and high net worth individuals protect and grow their wealth through commercial real estate investing. A two-time Michigan Entrepreneur of the Year finalist, Paul has founded multiple investment and development companies and co-managed a successful multifamily development. He is the cohost of The Art of Investing and <a href="https://www.wellingscapital.com/podcast" target="_blank" rel="noopener">How to Lose Money</a> and a regular contributor to both Fox Business and BiggerPockets.</p> <p>On this episode of Apartment Building Investing, Paul joins cohost Drew Whitson and I to discuss the disadvantages of the 1031 exchange and explain what makes the strategy incompatible with syndications. He introduces us to the Delaware Statutory Trust (or DST), describing how it solves the problems associated with bringing in 1031 exchange investors and allows them to invest passively in multifamily deals. Listen in for Paul’s insight on what kind of investor is attracted to the DST and learn how YOU can use it to defer taxes and earn a long-term, stable return!</p> <h3>Key Takeaways</h3> <p>The disadvantages of the 1031 exchange for investors</p> <ul> <li>Deadlines pressure to overpay/buy wrong asset</li> <li>Difficult to find cash match, total price match</li> <li>Requires co-ownership vs. passive investment</li> </ul> <p>Why 1031 exchanges are incompatible with syndications</p> <ul> <li>Tenancy in common agreement to keep control</li> <li>High legal fees, synd