Hands-Off Investment Options
Are you a real estate investor who is increasingly getting tired of hands-on property management? Our team at Diversified Investment Strategies can go over possible 1031 Exchange options with you that allow for a more hands-off approach. How would you like to trade in toilets and trash duties for travel and tee time? It may be possible with a 1031 Exchange!
As this RISMedia article points out, summertime is especially hard to enjoy when juggling property management duties as a real estate investor. The summer season can bring out even more challenges than usual. See how many of these you relate to:
-Increased landscape duties in the summer months
-HVAC system inspections and other routine maintenance and upkeep chores
-Tenants relocating during the summer months, having to find new tenants
-Working around tenant vacations or neighborhood/town events
-Difficult labor and heavy lifting out in the grueling heat
-Summer thunderstorms delaying or interrupting a project
-Damage from summer storms, flooding, fires, earthquakes, etc.
If some of these summer issues have affected you as a real estate investor this season, our team at DIS is here to discuss your 1031 Exchange options, so you can find a more hands-off approach.
1. A Delaware Statutory Trust (DST) allows multiple owners to own a percentage of a 1031 DST legal trust. These could include office buildings, shopping centers, warehouses, etc. With a DST, there is no property management. You can get rid of landlord duties and still receive cash flow from property ownership!
Aside from this great perk, you may also receive higher monthly “tax sheltered” cash flow, there is potential for greater capital investment appreciation, there is the potential to diversify and spread your equity across multiple properties, and much more.
2. A Triple-Net NNN lease asset provides cash flow potential from class “A” tenants, where the tenant is financially responsible for insurance, utilities, taxes, maintenance and rent. This offers real estate investors a very hands-off approach. You receive the income and your tenants do the work. These include drug stores, fast food restaurants, auto part stores, etc. With a NNN lease, the investor owns the property with no co-ownership, but a DST or 721 UPREIT may be utilized in some cases.
3. An UP-REIT (721 Exchange) cannot be exchanged directly as a 1031 Exchange, but a real estate investor may exchange into a DST fractural ownership investment and then UPREIT after 18-24 months in exchange for shares in a REIT. With a REIT, you may enjoy diversification by owning shares of multiple properties, perhaps hundreds or even thousands. Once in a REIT, you can no longer complete another 1031 Exchange.
More information on your 1031 Exchange options can be found on our website and in past blog posts. If you have questions, contact our team at DIS to discuss further! We’d love to help find the best option for you as a real estate investor, with fewer hands-on landlord duties and more time to enjoy retirement and all that life has to offer. Give us a call!
Bryan Hakola
Diversified Investment Strategies
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