1031 exchanges have been around for a long time. For a lot of investors, it has become a routine part of their portfolio management. However, like any investment, it’s essential to understand the nuances and benefits of the tool. One way to add value to your portfolio is by choosing a 1031 exchange delaware. This article outlines some of the essential benefits of choosing a Delaware Statutory Trust and why it’s a smart move for investors to consider.
Limiting Liability: One of the essential benefits of a Delaware Statutory Trust is that it can limit the investor’s liability. Unlike other forms of ownership, where investors are required to have active involvement, DSTs allow passive investment. Investors enjoy limited liability and limited management responsibilities. Delaware Statutory Trusts are also afforded protection by Delaware laws, providing investors with an added layer of protection.
Diversification: Diversification is the foundation of a strong investment portfolio. DSTs are an excellent tool for investors to add diversification to their portfolios. Investors enjoy access to the underlying trust assets without the day-to-day management responsibilities. These assets can include commercial properties that are not accessible to the average investor on their own. The asset types invested in can also be diversified and include multifamily, retail, office, and hospitality properties.
Reduced Fees and Expenses: DSTs provide a passive investment model, which means that investors can take advantage of lower fees, especially when compared to traditional partnership arrangements. This is because there is no need for a general partner who would otherwise earn fees based on assets under management. In contrast, DSTs have trustee responsibilities, which are typically charged at an annual fee that often presents costs lower than the fees charged by general partners.
Easier Management: When you own a rental property, you know the management that comes with it. DSTs eliminate this issue. Investors in a DST enjoy the advantage of being passive owners in commercial properties without the headache of property management. This feature of DSTs are helpful for investors who want to own commercial properties without managing them.
Legacy Planning: DSTs can offer excellent options for legacy planning as it allows investors to pass on the investment to their heirs. There are no limitations on the number of times an investor can complete 1031s and provide properties for their heirs through their estate. DSTs also offer a solution for intergenerational property transfer, which is a common issue many investors face.
Conclusion:
In summary, a Delaware Statutory Trust is an excellent investment tool that offers investors benefits, including limiting liability, providing diversification, reduced fees and expenses, and easier management. With all these benefits in mind, it is clear that DSTs are a smart move for any investor to consider when looking to invest in commercial properties. Investing in DSTs allows investors an opportunity to build a diversified real estate portfolio while maximizing returns and minimizing risk. If you are considering a 1031 exchange, it may be time to consider a Delaware Statutory Trust as well.