As more of our real estate investors learn about the potential benefits of DSTs, an increasingly common question that we receive is “What can I do to more fully understand if this is an option for me?”
Even investors who have done their homework on DSTs (including reading my book, Real Estate Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST)), often seek ways in which they can experience an initial investment before committing larger amounts of capital.
Fortunately, many DST sponsors will reduce the typical $100,000 minimum investment that they require for 1031 Exchange related investments to as low at $25,000 for a cash investment. Investors who invest the minimum amount will receive the same property and tax reporting that larger investors receive. They will also be able to take advantage of potential depreciation and expense write-offs available to all real estate investors that may reduce their income tax liabilities.
Finally, they may be eligible to defer the capital gains on their investment by doing a 1031 Exchange in the future when their asset is sold. Qualified investors who are new to real estate e.g., technology and stock market investors, also may be able to accelerate their learning curve by starting with a small DST investment. They can begin their journey of real estate education by participating in an investment that is fully managed on their behalf thereby providing a minimal time commitment.
DST real estate investments should not be undertaken unless the investor is patient and willing to hold their investment for the projected holding period which is typically 5 to 10 years. Also, smaller initial investments may make it more difficult to find future reinvestment options since proceeds from a future sale, even with appreciation, will limit possible 1031 Exchange replacement property options.
If you find that DSTs may be a possible future option and would like to take some
further steps to better understand the investment experience before making
larger investments, please feel free to contact the team at First Guardian Group
to assist you in selecting suitable options.
Please contact us either by email at info@FirstGuardianGroup.com or via phone at (866) 398-1031.