The majority of investors invest in DSTs as they don’t want to indulge in property management. As professional property managers back DST properties, investors don’t need to worry about maintaining their investment properties. However, a DST investment offers a lot more. A hike in the monthly income should not be ignored. It is one of the biggest benefits of investing in DSTs.
Benefits of a DST Investment:
- Low Investment – Large structures enable DSTs to accept small investments from investors. On the other hand, you being an investor, gets the opportunity to add a DST property in your portfolio for an investment as small as $100K.
- No Day-to-Day Management Responsibilities – Investors like to make a stack of properties. However, when it comes to managing them, they like to make a safe distance. Managing an investment property requires complete dedication and a lot of time besides the skills. DST properties come with pre-attached property managers, which means you enjoy freedom.
- 1031 DST Exchange – There is no such term in the dictionary, but it exists in the investment world. When you mix a 1031 exchange with a DST investment, you save big, and its called 1031 DST Exchange. Not only you defer your capital gain taxes, but you also get ownership of a DST property – this is one of the few benefits of 1031 DST Exchange.
- Increased Cash Flow – DSTs distribute monthly income to beneficiaries in the form of dividends. Data suggests that investors’ net monthly income increase in DST investment as compared to small individual investments. As the properties owned by DSTs are bigger, they generate more revenue.
How DSTs work?
Usually, a real estate firm, commonly known as a sponsor, buys properties and transfers the property title in the name of the trust. The trust not only owns the properties but also manages and could decide to sell it. The company registers the trust under Delaware Statutory Law and forms a DST. The trust invites investors, who then are given shares based on their investment. Investors can separately invest in DSTs, or they can also merge it with their 1031 exchanges. However, the majority opt for a DST investment when they are already doing a 1031 exchange.
Irrespective of all opinions, you must know the reason for your investment. Every investor has specific needs. If you just want to get rid of property management, you should look out for other options, too, like a 1031 NNN Exchange.
A NNN Or Triple Net Lease Removes The Burden Of Property Management From Your Shoulders.
By asking the tenant to cover all operating expenses associated with the rented property, a NNN lease sets you free from the burden of property management. You can do a 1031 exchange and invest in a NNN property. 1031 Exchange triple net properties can be found through some research. A NNN lease includes three major operating costs – insurance fee, property taxes, and maintenance cost. It could be a wise decision to invest in NNN properties if all you need is freedom from property management.