5 Passive Investment Benefits of Delaware Statutory Trusts
Delaware Statutory Trust is a real estate investment entity that allows investors to access high-grade commercial properties that they could not afford on their own.
The entity covers many properties, including self-storage facilities, multi-family apartments, medical offices, and industrial buildings.
Delaware Statutory Trust functions by sponsoring firms, thus serving as the master tenant after purchasing high-grade real estate and opening up trust for smaller investors to purchase at a subsidized rate.
Some of the passive investment benefits of buying real estate from Delaware Statutory Trusts include;
1. DST 1031 Exchange Properties
One of the main benefits of Delaware Statutory Trusts is giving investors access to the 1031 exchange. After deferring capital Gain Tax upon selling a piece of real estate property, investors can now utilize the 1031 exchange property listings and replace the relinquished investment with a like-kind property.
The 1031 exchange allows potential investors to spread the exchange earnings.
Delaware Statutory Trusts also assists investors in satisfying their exchange requirements through leveraging various ratios. The DST exchange structure helps investors open up other lucrative investment possibilities that they could not have achieved independently. The system also allows investors to become passive, thus having not panicking about the daily running of real estate.
2. Avoiding the Terrible Ts
Delaware Statutory Trusts grants investors the opportunity for passive earnings streams. Investors are relieved of their active real estate positions and duties. Therefore, they can avoid the unpleasant demands of controlling and maintaining their tenants, trash, and toilets, thus being exempted from performing the landlord duties and tasks.
This gives the investors the freedom of searching for the terrific Ts, which grants them time, teeing off, and traveling without disturbances.
With the DST tenants in the standard 1031 exchange structure, your real estate properties will be professionally managed without giving the investor any management responsibilities.
3. Accessing High-Grade Properties
Delaware Statutory Trusts are fractional properties that allow numerous 1031 investors the ability to purchase significant, high-grade assets that could be out of reach to them.
By exchanging into a DST and merging equity with other potential stakeholders, the investors get the opportunity of owning one or more institutional-grade assets that are more than what they could have managed on their own. The long-term triple net leased properties offered by DST allow investors to have long-term earnings without renegotiating the lease.
4. Pre-Acquired Properties
Delaware Statutory Trust acquires high-grade real estate and then opens up a trust for smaller investors to purchase at a subsidized rate. The investors tend to buy a pre-acquired property, reducing their risk of missing the IRS deadlines for 1031 exchanges.
DST performs due diligence, gathers necessary documents, including environmental reports, inspections reports, properties’ financial statements, installs a third-party management team, and secures financing before acquisition.
Thus investors do not have to inquire about the documents since they are investing in a secure property.
5. Diversification of Opportunities
Delaware Statutory Trusts allows investors to invest in multiple investments. The real estate entity does not limit the number of assets each DTS investor should purchase; thus, the investors have the freedom to exchange into numerous investments that provide diversification in both geographical location and type of business.
For example, an investor who owned and operated an office space investment can roll the income of office property sale to another investment in a different field such as an industrial family home by purchasing a fractional investment.
This helps investors to avoid potential concentrating risks that can occur on a specific DST property. Thus, distributing the risk to multiple properties prevents investors from avoiding certain risks but does not protect you against losses or guarantee lucrative proceeds.
From the blog, it’s clear that Delaware Statutory Trust provides potential investors with plenty of passive benefits in their real estate business. The entity gives investors access to 1030 exchange of property to reinvest their proceeds to other DSTs businesses.
Investors can avoid the terrible Ts of tenants, trash, and toilets, and have access to high-grade investments which they cannot afford on their own. Delaware Statutory Trust also helps investors avoid pre-acquisition risks since they invest on a property that DST has already performed due diligence and acquired necessary documents.
Thus, investors should consider supporting DST to enjoy those attractive passive benefits.
