During these uncertain times, it’s important to diversify your real estate investment assets. REITs are one great way you can do that. Our team at Diversified Investment Strategies is here to help you choose the best investment options for you and your needs, and to guide you through a 1031 exchange if that is what makes the most sense for your situation.
REITs allow you to invest in premium commercial properties and earn a monthly rental yield, to help you build long-term wealth. At the same time, these are hands-off investments, which means you don’t have to own, operate or manage physical property and tenants.
The types of properties you can invest in with REITs are typically unaffordable and hard to manage for a single investor. With a REIT, or real estate investment trust, you can invest as a shareholder in one or many properties. Fractional ownership allows you to diversify your assets across multiple locations, property types, etc. This way, if a property goes under, you still have many other assets to rely on.
If you’d like to use a 1031 exchange to invest in REITs, you cannot do so directly, since it’s not considered like-kind. However, it can be accomplished by first exchanging into a DST, a Delaware Statutory Trust, for two years. After the two year period, an UPREIT can take place using a 721 Exchange, and the property is pushed into the REIT on a tax-deferred basis. REITs can be sold after one year of ownership of the shares.
Our team at DIS can help you with a 1031 exchange if you’d like to sell your current properties and exchange them into a DST, and in a couple years, an UPREIT. If you have any questions about any of this, or any other investment option you’re thinking about, give us a call! We are here to help.
2020 has been an unprecedented year for commercial real estate. Diversification is the best way to protect yourself against the unknowns and the unexpected, and a 1031 exchange is a great way to sell your current hands-on properties and buy into DSTs or REITs without paying federal taxes on your properties.
No matter what your real estate investment goals are for 2021, let us help you make it your best year yet! Give us a call, we’re here and ready to answer your questions and to help guide you.
This is for informational purposes only, does not constitute as individual investment advice, and should not be relied upon as tax or legal
advice. Please consult the appropriate professional regarding your individual circumstance.
Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment
risk.
A REIT is a security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages.
REITs receive special tax considerations and typically offer investors high yields, as well as a highly liquid method of investing in real estate.
There are risks associated with these types of investments and include but are not limited to the following: Typically, no secondary market
exists for the security listed above. Potential difficulty discerning between routine interest payments and principal repayment. Redemption
price of a REIT may be worth more or less than the original price paid. Value of the shares in the trust will fluctuate with the portfolio of
underlying real estate. Involves risks such as refinancing in the real estate industry, interest rates, availability of mortgage funds, operating
expenses, cost of insurance, lease terminations, potential economic and regulatory changes. This is neither an offer to sell nor a solicitation
or an offer to buy the securities described herein. The offering is made only by the Prospectus.
There are material risks associated with investing in DST properties and real estate securities including liquidity, tenant vacancies, general
market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental
rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties,
financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the
entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, returns and appreciation are not
guaranteed. IRC Section 1031 is a complex tax concept; consult your legal or tax professional regarding the specifics of your particular
situation. This is not a solicitation or an offer to sell any securities. DST 1031 properties are only available to accredited investors (typically
have a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last three years) and
accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity please verify with your CPA and
Attorney.
Statements concerning financial market trends are based on current market conditions, which will fluctuate.
Diversified 1031 does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance.
Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Diversified Investment Strategies is
independent of CIS.
Bryan Hakola
Diversified Investment Strategies
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