Insights
Capital Structuring: Have you considered Delaware Statutory Trusts (DST)?
Investigating alternative sources of capital for real estate deals: have you considered underwriting a Delaware Statutory Trust?
An IRS Section 1031 exchange is a powerful tax-saving strategy that allows investors to defer paying taxes on the sale of an investment property by using the proceeds to purchase a "like-kind" replacement property. One option for investors to consider when conducting a 1031 exchange is investing in a Delaware Statutory Trust (DST).
A DST is a type of real estate investment trust that allows multiple investors to pool their funds together to purchase a fractional ownership interest in a larger commercial property. By investing in a DST, investors are able to gain access to institutional-grade properties that may be out of their reach as individual investors.
One of the main benefits of investing in a DST through a 1031 exchange is the ability to diversify your portfolio. DSTs offer a diverse range of properties, such as multi-family, retail, office, and industrial properties, which can provide a diversified portfolio that can help to mitigate risk.
Another benefit of investing in a DST through a 1031 exchange is the potential for higher cash flow and long-term appreciation. DSTs typically generate income through rental income and can provide a stable source of passive income. Additionally, they can appreciate in value over time, providing a potential for capital appreciation.
Moreover, DSTs can provide a hands-off investment experience. As a fractional owner, an investor will not have to deal with the day-to-day management of the property, leaving that to your professional property management team, which allows the investor to focus on other aspects of their life.
Finally, DSTs can provide a simplified 1031 exchange process. By investing in a DST, an investor can complete their 1031 exchange quickly and easily, without the need to identify, negotiate and close on a replacement property within the strict timeframes required by the IRS.
In conclusion, investing in a Delaware Statutory Trust through a 1031 exchange can provide investors with a range of benefits, including diversification, stable income, long-term appreciation, a hands-off investment experience, and a simplified exchange process. Many investors considering a 1031 exchange, consider a DST as a replacement property.
Are you considering your next real estate offering to be structured as a DST? If not, please reach out to Franklin Lewis Partners to talk through your capital sourcing strategy for Real Estate.