DST 1031 properties are among the more attractive financial vehicles for folks who are trying to find tax-deferred ways to invest in real estate. You wonder, though, exactly who might invest in a DST 1031 exchange. Take a look at 5 types of people who may fall in love with this sort of investment.
1. Anyone Who Doesn't Want to Be a Landlord
Folks who tell you to buy real estate as an investment sometimes forget to tell you some of the downsides. If you're going to end up being a landlord as a result of acquiring properties, you're in for what is known as the Three T's: toilets, tenants, and taxes. A DST 1031 exchange is a trust that represents the interests of its beneficiaries. Consequently, someone who invests in one isn't on the hook for dealing with the Three T's of real estate.
2. People Who Need to Diversify
When people buy properties, they generally end up acquiring them from fairly limited asset classes. Someone might only buy one or two properties close to where they live, for example. Depending on the state of the market, this might leave you exposed to locations that are all in one sector of the market, such as high- or low-end single-family housing. A trust can diversify its interests significantly. It also can acquire properties that might be out of the beneficiaries' range, such as large, multifamily apartment housing.
3. Those Who Want Low Taxes
A DST 1031 exchange is intended to provide significant tax benefits by exchanging like-kind properties. Done the right way, this process can keep beneficiaries from paying taxes for many years to come.
4. Passive-Income Investors
Folks hunting for investment opportunities oftentimes want to put as little effort into the problem as possible. This can attract them to asset classes like dividend-yield stocks, ETFs, and high-yield income funds. All of these financial vehicles have significant exposure to the whims of the market. While a DST exchange is far from immune to the market's ups and downs, it does involve assets that are historically strong over many decades.
5. Anyone with Limited Money to Invest
If you don't have millions of dollars to drop into the real estate market, DST 1031 properties may be highly appealing for you. A major advantage here is that someone who might only have $100,000 to invest can buy into real estate without dumpster diving. This can insulate smaller investors from issues with less desirable properties.
If you think you're ready to expand your investing, contact services that can help you with a DST 1031 exchange.