A DST, also known as Delaware Statutory Trust, is a separate legal entity established as a trust and derived from Delaware Statutory law. This trust is regarded under Section 1031 as a tax-deferred exchange. With a DST, a property investor can partner with other investors in one or multiple properties. DSTs are not new, nonetheless, they have been popularized among 1031 exchange investors, all thanks to current tax laws.
As an investor, you can buy or sell DST interests. With this type of investment, you are given a fraction of equity and debt ownership, which fulfils your exchange requirements. The minimum amount required for investing in DSTs range from $25,000 US to $100,000 US. In other words, an individual may be entitled to a fractional interest of a property or portfolio and portions of the payment from the trust. These payments are derived from rents and in some cases, the sales of the property involved.
Why Do You Need A 1031 Exchange DST?
This type of DST is ideal for investors who seek to generate profits from real estate without having to own properties directly. As a DST investor, you can receive rental income from a property just like any landlord would. This provides you with a whole lot of benefits.
1. You Do Not Need To Manage The Property
Most times, landlords are confronted with the task of running their properties effectively. This task can be time-consuming, stressful, and financially draining. However, being a DST investor implies that such responsibilities are taken off your shoulders. A professional team of experienced property managers are available to run various operations on the property.
2. Invest In High-Value Properties
Investing in multi-million-dollar properties personally can be impractical for most real estate investors. With DST, this dream can become a reality as it provides you with the opportunity to procure investment-grade, high-valued properties. As a DST investor, you partially own a luxury property along with other investors and can get the proceeds from the rent or sale of that property.
3. Diversification Options
Delaware Statutory Trust offers you the option to select the amount you choose to invest in a property. Therefore, you can invest in several DST properties, thereby diversifying your real estate portfolio. Real estate lovers find DST investments appealing and rewarding.
4. Consistent Earnings
In a DST investment, a certain amount of money is reserved for property repairs and other unforeseen expenses. Nevertheless, the proceeds and earnings from the property are promptly distributed to the investors on a regular basis. This means that your earnings are consistent and embedded in a specific timeframe.
5. Mortgage Loan Qualification Is Not Needed
Being a DST investor means that you do not need to qualify for the property’s mortgage loan. The one responsible for this loan is the Delaware Statutory Trust. Also, this loan is nonrecourse to a real estate investor. Another good thing worth mentioning is that you do not have to supply any personal loan documentation for mortgage.
If you are an investor seeking to invest in real estate with ease, you would find this option rewarding. If you would like to know more about investing in DSTs, please visit this link: 1031 exchange DST.