1031 exchanges are a great wealth-building tool, but they have their drawbacks, including unilateral decision-making and increased liability. One great, lesser-known way to compensate for these shortfalls are Delaware Statutory Trusts (DSTs), and here to shed light on this unique ownership model is returning guest, Paul Moore. Before we dive into DSTs, Paul talks about why he and his Wellings Capital team have decided to expand into self-storage and mobile home parks despite his previous declarations of multifamily being the perfect investment.
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We then get into the meat of the show, where Paul provides an overview of DSTs. Simply put, they are 1031-exchange friendly legal entities that allow co-investing to either purchase a single property or a portfolio. We learn about how they work hand in hand with 1031s while allowing investors to free up time and still continue to defer capital gains tax. Paul also walks us through an illuminating example of how Wellings Capital is using DSTs with their mobile home investments along with the benefits for them and their investors. DSTs are by no means a catch-all model, and Paul gives us an overview of some of the ways they can fall short. If you are interested in learning more about another great tool to add your wealth-building kit, be sure to tune in today!
Key Points From This Episode:
- Updates from Paul and why Wellings Capital has expanded to self-storage and mobile home parks.
- Insights into a 1031 exchange and some of the drawbacks that come with this tool.
- How Paul’s dealing with a client-led him to learn about Delaware Statutory Trusts.
- Defining a DST and how it compensates for the 1031 exchange weaknesses.
- The operator side of setting up DSTs and how investors typically hear about them.
- An example of how Paul has used DSTs in his business to help his investors reach a goal.
- The typical hold period of a DST and the ideal investor it’s targeted at.
- Some important drawbacks to keep in mind with DSTs.
- A recent business improvement, how Paul is meeting investors, and the biggest contributor to his success.
- Hear more about how Paul gives back and the cause he’s dedicated to.
[bctt tweet=”A 1031 exchange is something that’s set up by IRS code that allows people to swap one real property for another. By doing that though, the property cannot be part of an LLC. It can’t just be ownership in a business. It has to be a real property. — @PaulMooreInvest” username=”whitney_sewell”]
Links Mentioned in Today’s Episode:
About Paul Moore
After graduating with an engineering degree and then an MBA from Ohio State, Paul Moore started on the management development track at Ford Motor Company in Detroit. After five years, he departed to start a staffing company with a partner. They sold it to a publicly traded firm for $2.9 million five years later. Along the way, Paul was Finalist for Ernst&Young’s Michigan Entrepreneur of the Year Award two years straight. Paul later entered the real estate sector, where he completed 85 real estate investments and exits, appeared on an HGTV Special Real Estate episode, rehabbed and managed dozens of rental properties, developed a waterfront subdivision, and started two successful online real estate marketing firms. Three successful developments, including assisting with the development of a Hyatt hotel and a multifamily housing project, led him into the multifamily investment arena. Paul co-hosts a wealth-building podcast called How to Lose Money and is a writer for BiggerPockets. Paul is the author of The Perfect Investment–Create Enduring Wealth from the Historic Shift to Multifamily Housing.
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