There are many potential advantages associated with exchanging for Delaware Statutory Trust (DST) 1031 property.
However, it is important to note that these potential benefits should always be carefully weighed against the potential risks that may arise with a DST investment. Also, as with all real estate investments, investors should consult a tax or certified public accountant before investing. DST.
However, DST still growing in popularity, Especially among older baby boomers who are tired of managing their own wealth and are looking for ways to transition to passive income streams. It not only offers the possibility of
1. Tax deferral using 1031 Exchange
Many real estate investors have wanted to sell their rental or commercial property for years, but were unable to find a property to replace it, resulting in federal capital gains tax, state capital gains tax, and depreciation. reimbursement tax, and Medicare Surtax. The DST 1031 Real Estate Solution allows investors to transition from an active to a passive role in property ownership on a tax deductible basis.
2. Eliminate the hassle of property management
Many DST investors are approaching retirement age and are tired of the hassles associated with owning and managing real estate. Tired of tenants, restrooms, trash and want to move away from active property management. The DST 1031 property is passive ownership This will allow me to enjoy my grandchildren, travel and leisure in retirement and focus on other things I am more passionate about instead of the headaches of property management.
3. Increased cash flow potential
Many investors underestimate the cash flow from their current properties due to below market rents, vacancies, or idle vacant lots. A DST 1031 exchange property provides an opportunity for an investor to potentially increase cash flow through his 1031 exchange with tax deferrals.
4. Portfolio diversification
In many cases, 1031 investors have sold properties that make up a significant portion of their net worth. They want to reduce the potential risk and rather than buying one property (such as another apartment building) or one property, NNN You decide to invest in buildings (such as the Walgreens pharmacy and the Taco Bell restaurant). diversified Portfolios of DST 1031 properties with multiple locations, asset classes (property types), and tenants are better suited to their goals and objectives.
This is similar to how investors tend to invest their retirement savings in mutual funds and exchange-traded funds (ETFs) instead of investing in the stocks of specific companies. However, it is important to note that there is no guarantee that a diversified investment will be profitable or against loss.
5. Lock-in non-recourse finance
one of the requirements of 1031 Exchange This means that the substitute property will bear a debt equal to or greater than that of the transferred property (sale property). In today’s lending environment, it is often difficult to obtain non-recourse financing at interest rates and terms acceptable to investors. Sponsors of DST 1031 properties typically have strong financing relationships and are able to secure non-recourse financing on the best terms available in the market. Investors in DST 1031 will receive these funding terms directly. These funding terms are often otherwise unobtainable on your own.
6. Access to institutional grade real estate
DST 1031 properties are large, institutional grade real estate Otherwise, they are often out of the retail investor’s price range. Even with his typical minimum investment of $100,000, an investor could take ownership of a large apartment community over $20 million, a pharmacy over $5 million, or a grocery store worth $15 million. can be purchased. This will give investors access to previously uninterchangeable levels of real estate.
That being said, many clients with very large 1031 exchanges didn’t want to “put all their eggs in one basket” by buying one big investment property, so the DST 1031 You have chosen to invest in property.
To learn more about Kay Properties, or to view the current list of 1031 Exchange Eligible Properties, please visit: kpi1031.com to receive your free 1031 Replacement Toolkit.
This article is provided by Kay Properties & Investments.
Kay Properties & Investments is a national Delaware statutory trust (DST) investment company. The www.kpi1031.com platform offers access to a marketplace of DSTs from over 25 different sponsoring companies, custom DSTs available only to Kay clients, independent advice on DST sponsoring companies, and access to each DST (typically 20-40 DST) full due diligence and review. ) and DST secondary markets. Kay Properties team members collectively have nearly 400 years of real estate experience, are licensed in all 50 states, and have participated in his DST 1031 investments of over $30 billion.
Investments in real estate, Delaware Statutory Trust (DST) real estate, and real estate securities are subject to illiquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risk, and new supply risk. etc., poses significant risks. Rent Markets and Softening, General Risks for Commercial and Multifamily Ownership/Operations, Short-Term Leases Associated with Multifamily Residences, Funding Risks, Potential Adverse Tax Impacts, General Economic Risks, Development Risk, and long-term holding period. All offerings described are Regulation D, Rule 506c offerings. You run the risk of losing all of your invested principal. Past performance is no guarantee of future results. Potential distributions, potential returns and potential gains are not guaranteed. In order for an investor to qualify for any type of investment, there are both financial and suitability requirements that must be met with specific objectives, goals and risk tolerance. Securities offered through FNEX Capital, member FINRA and SIPC.
Note by BiggerPockets: These are opinions written by the authors and do not necessarily represent the opinions of BiggerPockets.
