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lease property relies heavily on the quality of that sole tenant, and if that tenant fails, the investor’s income is likely to be reduced or eliminated completely (during COVID-19 there were a number of NNN tenants that went bankrupt or sought rental relief from their landlords). Also, triple net lease properties can be hard to locate, and conducting proper due diligence can be very difficult to accomplish within the time frame of 1031 exchange.
That’s why many landlords are utilizing Delaware Statutory Trust (DST) 1031 Exchanges to exit the active management role of owning rental real estate. DSTs are a form of fractional ownership that can be used to make passive investments in real estate and achieve monthly income potential via ACH direct deposit and diversification across multiple assets. Also, because DSTs are eligible for 1031 Exchanges, investors can sell their investment property and reinvest the proceeds into one or more DST investments while deferring capital gains and other taxes.
Another reason DST investments are popular among real estate investors is because many types of diverse real estate assets can be owned in a DST, including industrial, multifamily, self- storage, medical and retail properties. Also, it is not uncommon to find properties within a DST investment include institutional quality assets like those owned by large investment firms such as a 450-unit Class A multifamily apartment community or a 100,000-square-foot industrial distribution
facility leased to a Fortune 500 logistics and shipping company.
In addition, Delaware Statutory Trust 1031 Exchanges offer real estate investors the following specific benefit potential as well:
● The ability to close their 1031 Exchange within typically 3-5 days
● The opportunity to eliminate the hassles of tenants, toilets, and trash (i.e. the Three T’s).
● The potential to receive regular monthly distributions via ACH direct deposits
● The ability to access institutional grade real estate assets
● The potential advantages associated with greater portfolio diversification by geography, tenants, and asset class*
THE BOTTOM LINE
Investment properties have gone through significant changes over recent years, and in many cases, owners have been faced with challenges they have never seen before, including the COVID-19 pandemic, and ensuing eviction moratoriums. For qualified property owners who are motivated to sell in the near future and are facing capital gains, reinvesting the proceeds in qualifying properties including DSTs will allow them to not only defer capital gains taxes but also become part of a diversification* strategy with the potential for appreciation and monthly income.
This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing. IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation. There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market con- ditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire invest- ment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaran- teed. Nothing contained on this website constitutes tax, legal, insurance or investment advice, nor does it constitute a solicitation or an offer to buy or sell any security or other financial instrument. Securities offered through FNEX Capital, member FINRA.
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