1031 exchanges are a great way to defer capital gains taxes on investment properties you’ve sold. However, these can get quite complicated, requiring careful planning and investment. One way to simplify the process is by choosing to invest in a dst 1031 investments replacement property. In this blog post, we’ll discuss the benefits of choosing a DST for 1031 exchanges, so you can make an informed decision on your next investment move.
Hassle-free Management
Investing in DSTs is a great way to relieve yourself of the day-to-day management responsibilities of a real estate property. With DSTs, professional asset managers take over all the details of property management and share the results with the investors. You can invest your money in a professionally managed investment property and enjoy the benefits of passive income with minimum effort.
Diversification
One of the biggest benefits of investing in a DST is that it offers access to highly diversified real estate offerings. This helps to disperse the risks in your investment portfolio across a variety of properties and asset classes. Moreover, DSTs help you diversify geographically among different markets, asset classes, and property types in a way that would be challenging independently.
Reduced Risk
Investing in DST is a lower risk compared to owning a property. The DST structure lets you share liability with other investors, which helps to shorten your due diligence process, reduce individual financial risk, and diversify your investment. Additionally, DSTs can reduce the headache and risks associated with sole ownership of properties.
Access to Premium Properties
DST investments provide access to premium properties that would be hard to get by non-institutional investors. This is because DST companies invest in larger, high-quality and high-cost properties meaning they can collect significant amounts of money from ordinary investors thereby increasing everyone’s buying power.
Eliminate Property Management Worries
Investing in commercial real estate requires high levels of responsibility and hard work from property management. The DST structure clearly separates financial and management responsibilities, which means that the manager takes on the responsibilities of upkeep and other property-related issues.
Conclusion:
In summary, the benefits of investing in DSTs are numerous, ranging from reduced property management responsibilities, diversification, elimination of property management worries, reduced risks, and access to premium properties. As a 1031 exchange replacement property, DSTs provide an excellent opportunity to defer tax on capital gains and reinvest in high-value assets. Therefore, if you’re considering a 1031 exchange, investing in a DST is a worthy consideration.
