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By Al DiNicola, AIF
A Delaware Statutory Trust (DST) is a relatively new vehicle providing individual investors access to large institutional grade commercial properties. These properties typically are large the financial size than what a individual would be able to purchase. Large commercial properties are owned by pension funds, Real Estate Investment Trust (REITs), insurance companies and other large fund who can deploy private or public funds.
For those cash investors and potentially more importantly the investors seeking to utilize a 1031 exchange strategy the DST option can be very valuable. Especially when purchasing (replacement of property for 1031 investors) and when the DST investment is sold (the exit). The advantages include not only deferring the capital gains and recapture of depreciation but also tax advantaged passive income (monthly/quarterly).
One of the first concerns of real estate investors is the management of the property. DSTs are professionally managed investments providing a relief to investors. This is a passive investment. The type of DST properties includes many of the same types of properties but on a larger scale including:
- Apartment buildings (multifamily)
- Student Housing
- Senior Housing
- Single Family Rental Communities
- Manufactured Housings
- Retail
- Office/ Life Science
- Medical Office
- Industrial buildings
DSTs are pre-packaged by design to offer investors a selection of asset styles as well as geographic locations. While there is a minimum to invest (typically $100,000), most DST acquisitions are easily obtainable by accredited investors (qualification reviewed later). Some of the advantages enable investors to diversify portfolios without any landlord duties and provide monthly income with significant tax advantages.
Next article Part 3: What are the risks Associated with a Delaware Statutory Trust?
DST’s (Delaware Statutory Trusts) are for accredited investors only. Contact your investment adviser for additional details on how a DST may be a solution to your 1031 Exchange and compliment your financial objectives. For more information on how to properly set up an IRC 1031Tax Deferred Exchange or if you are an accredited investor and would like additional information on a DST contact Al DiNicola at 239-691-8098 or email adinicola@namcoa.com. This is not an offer to purchase or solicitation to purchase any security, as such be made only through an offering memorandum or prospectus. Investing in securities, real estate, or any investment, in any form, involves risk, including but not limited to the potential of losing some or all of your investment dollars when you invest in securities. You should review any planned financial transactions that may have tax or legal implications with your personal tax or legal advisor. NAMCOA, LLC is a Registered Investment Advisor, regulated by SEC (Securities and Exchange Commission). Our corporate office is located at 999 Vanderbilt Beach Road, Suite 200, Naples Florida 34108. Securities Offered through MSC-BD, LLC, Member of FINRA/SIPC. 410 Peachtree Parkway Suite 4245, Cumming, GA 30041. MSC-BD, LLC and NAMCOA are independently owned and are not affiliated.
