Another term for ‘embracing a passive investment’ could also be ‘giving up control of an investment.’ Both mean the same thing, but they conjure vast psychological differences for some investors. Does the concept of giving up control feel foreign or even scary?
But is this also your situation?
You’ve owned a rental property for a long time and you’re tired of the maintenance, tenant problems, lease agreements, et cetera, et cetera. Are you ready to enter into your golden years with little to no investment responsibility and spend more time relaxing and enjoying your income instead of answering phone calls from disgruntled tenants.
An investment such as a Delaware Statutory Trust (DST) lets you, the investor enjoy a hands-off, day-to-day attention. Some say enjoy…some say no way! If you’re in the “no way” category, let’s try to break down your fear or out-of-your-comfort-zone thinking. If you’re unsure if a DST or passive investing is an option you’d like to explore, here are some answers to common concerns. We think you’ll be surprised at how easy it is!
Does a passive investment suit my lifestyle?
Perhaps the most enticing benefit of investing in a passive investment like a DST is its truly hands-off nature of ownership. You don’t need to worry about property management, tenant issues or other day-to-day operational functions, freeing up your time and energy while still allowing your investment to potentially grow. This can be very appealing to many investors.
Who will manage my properties?
Not you, that’s for sure! DSTs are managed by experienced professionals who specialize in real estate investment and property management relieving you of the burden of day-to-day property management tasks such as maintenance, tenant relations and lease negotiations. As a passive investor, you can rely on the expertise of the DST management team to make informed decisions on your behalf.
Is a passive investment tax efficient?
Yes! Instead of just selling your income property and paying $$ in capital gains taxes, you can structure the investment as a trust, potentially deferring capital gains taxes you would have paid in a traditional property sale. Read: NO CAPITAL GAINS TAXES. Additionally, you may be able to leverage the exchange to roll over capital gains from one DST into another, further deferring tax liabilities which can mean good things for your heirs.
Can I diversify?
Of course! One of the key benefits of investing in a DST is the ability to diversify your investment portfolio. By pooling funds with other qualified and accredited investors, you gain exposure to a broader range of real estate assets across different markets and property types. This diversification helps mitigate risks associated with concentrating your investments on a single property or location.
Will I receive a stable income stream?
Many DSTs focus on income-generating properties, such as apartment complexes, office buildings or retail centers. As a result, investors often receive a consistent stream of passive income in the form of regular distributions from the rental income generated by the underlying properties. And remember – there’s nothing really for you to do.
Diversified Investment Strategies represents a team of experienced and trusted professionals specializing in real estate investment and services – including buying, selling, leasing, retirement planning and wealth growth and management through strategic, informed investment choices and a meticulous real estate investment analysis. As knowledgeable replacement property professionals, they help clients build a customized strategy that identifies suitable investments pursuing successful completion of a 1031 Tax-Deferred Exchange. Visit them at www.diversified1031.com or call 949-379-2080.
*Example portfolio is hypothetical and for illustrative purposes only. Individual results will vary and are not guaranteed.
Because investor situations and objectives vary this information is not intended to indicate that an investment is appropriate for or is being recommended to any individual investor.
This is for informational purposes only, does not constitute individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance.
Potential cash flows/returns/appreciation are not guaranteed and could be lower than anticipated. 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.
There are material risks associated with investing in private placements, Delaware Statutory Trusts (“DSTs”) and real estate securities including the potential loss of the entire investment principal, illiquidity, tenant vacancies impacting income and revenue, general and real estate market conditions, lack of operating history, interest rate risks, competition, including 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 investors should read the PPM carefully before investing paying special attention to the risk section.
DST 1031 properties are only available to accredited investors (typically defined as having a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two years; or have an active Series 7, Series 82, or Series 65). Individuals holding a Series 66 do not fall under this definition) 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.
Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Diversified 1031 is independent of CIS.
FOR ACCREDITED INVESTOR USE ONLY.