For many people who begin investing as young adults, it often mattered little what the investment was so long as it was generating a profit. As a result of this, investors who are now officially baby boomers or senior citizens often have long-held real estate investments in their portfolios. But as they age, it becomes clear to them that they would rather have investments that are considered more passive than their current ones. When this is the case, a Delaware Statutory Trust 1031 Exchange is often their best bet.
What is a Delaware Statutory Trust 1031 Exchange?
Once a lesser-recognized investment strategy, the 1031 Exchange has now gained in popularity due to its simplicity and numerous tax advantages for its investors. Qualifying as replacement property for standard 1031 Exchanges, the Delaware Statutory Trust 1031 Exchange now permits more than 100 investors to participate in the investment as beneficial owners. In addition, the Delaware Statutory Trust can now own all of the fee-simple interest in the investment property, making it an even more attractive option for investors wanting to maintain their level of investment without taking on additional responsibilities.
How Does It Work?
What makes the Delaware Statutory Trust 1031 Exchange work so well for investors is having the ability to let numerous potential investors vie for the chance to purchase a beneficial interest. While at first glance this may look and sound risky, the opposite is actually true. Under this arrangement, the master tenant simply acquires the property under the Delaware Statutory Trust umbrella and allows investors to join up. This allows them to do one of two things with their money, which is either deposit standard 1031 Exchange profits into the DST or purchase an interest in DST directly. With these options investors can find themselves owning such types of property as apartment buildings, medical offices, or even large shopping malls.
Like any investment opportunity, a DST is not without its share of potential risks. Loan defaults, high vacancy rates, and lack of sole ownership are all distinct possibilities with a DST. However, its biggest advantage is giving some investors the chance to buy into certain properties they otherwise would not be able to do on their own. By consulting with investment advisors on legal and tax advice prior to entering into these investment arrangements, it’s quite possible to not only have more money in your later years, but also much more time to enjoy it as well.
For more information on 1031 Exchange Replacement Properties in the form of Delaware Statutory Trusts contact Corcapa 1031 Advisors (949) 722-1031 or complete the contact form below.