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Own Investment Real Estate?

Tired of Property Management headaches? Concerned about Rent Controls & Proposed Property Tax Increase?

Have you heard of the potential benefits of a 1031-Tax Deferred Exchange into a Passive Ownership of commercial properties with a Delaware Statutory Trust (DST)? DSTs enable you to diversify your real estate investment by asset type, size and even geography.

A natural concern of investment property owners today, who are considering a property sale and new purchase using a 1031 Exchange, is the income-producing strength of the replacement property. The economic impacts of the coronavirus have wreaked havoc on the commercial real estate industry, rendering once strong property types vulnerable.

That’s one reason suitable investors consider using the Delaware Statutory Trust (DST) structure for their exchange. Because DSTs have the latitude to purchase properties of different asset types, different sizes and in different locations, one would have access to investment choices that may have the potential to perform better than others as we work our way through and out of this current recession. Those choices may also offer the potential for better income or capital growth than what is currently available with a traditional 1031 Exchange. Perhaps of most importance, the ability to broadly diversify may help minimize your investment risk.

So, while one may currently own a residential rental property and were thinking of exchanging into a similar property, DST sponsors offer you the ability to have fractional ownership in many different property types including:

  • Multi-Family Apartment Buildings
  • Single-Tenant Net Lease Retail Properties
  • Medical Office Buildings
  • Self-Storage Properties
  • Student Housing Properties
  • Industrial Distribution Centers
  • Commercial Office Buildings
  • Hospitality Properties

Since DST investors own a ‘fractional interest’ in a property, one may be able to invest in a much larger, institutional-quality property than they would with a 1031 Exchange. And finally, DST sponsors offer properties throughout the United States, providing options to own in areas that may have stronger economic fundamentals than others at this moment in time.

For more information, please feel free to contact our team at Financial Designs, Ltd by calling (858) 597-1980. You can also schedule a phone call, one-on-one meeting or a Zoom conference with us at your convenience. Also join us at our Strategies to Dispose of Appreciated Real Estate webinars from the convenience of your home or office.

It is important to note that DST investing is subject to specific eligibility criteria, and only individuals who meet the definition of an accredited investor are permitted to participate.

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. Before considering a DST investment, it is crucial to evaluate your eligibility as a qualified investor. Our team is committed to assisting you in this process, ensuring that you meet the necessary requirements to participate in DST opportunities. Additionally, we are here to address any questions you may have and provide detailed information to guide your investment decisions.

Please be aware that DST investments involve risks and considerations which include but are not limited to substantial fees and expenses, inability of the DST to actively manage the property, strict timing limitations and risk of not meeting requirements for 1031 exchange tax treatment, and other negative tax consequences. There are risks associated with investing in real estate and Delaware Statutory Trust (DST) properties including, but not limited to, loss of entire investment principal, declining market values, tenant vacancies, lack of liquidity with restrictions on ownership and transfer. Potential cash flow, returns and appreciation are not guaranteed and could be substantially lower than anticipated. Diversification does not guarantee profits or protection against losses.

Additional risks and considerations related to investing in 1031 DST commercial real estate include, but are not limited to, general real estate risks, financing risks, tax risks, interest rate risk, management risks, operating risk, market risks such as supply and demand, changing market demographics, tenant turnover, tenants inability to pay rent, acts of God such as earthquakes, floods or other uninsured losses. There are also potential risks relating to the trust structure and the potential for adverse changes in laws and regulations. This material is not to be interpreted as tax or legal advice.