Five Things Investors Should Be Aware Of Before Getting Into A DST 1031 Investment

Posted on: 18 February 2020

These days, the DST 1031 exchange agreement is becoming increasingly prominent in the world of real estate investing. There are some basic things you should know about DST 1031 exchanges if you are researching the real estate investment options that are available to you. 

The following are five things investors should be aware of regarding DST 1031 exchanges:

DST stands for Delaware Statutory Trust

When you're negotiating your way into a DST 1031 exchange agreement, you need to know the lingo. To begin with, you should know that DST stands for Delaware Statutory Trust. 

The DST 1031 entity was created through Delaware statutory law. The Delaware Statutory Trust Act was passed in 1988 and made the establishment of this type of legal entity possible. A DST is a type of entity that is designed to hold the titles of investment real estate assets. 

A DST 1031 exchange can be used to defer capital gains taxes

One of the primary functions of a DST 1031 exchange for an investor is that these entities make it possible for individual investors to put off capital gains taxes. The potential ability to defer such taxes is just one of the numerous advantages that a DST 1031 exchange offers to an investor.  

While apartments are the most common type of property deal with in these exchanges, they are also used for retail and office properties

The DST 1031 exchange setup is flexible so that numerous types of properties can be jointly owned in this way. While the majority of properties owned through DST 1031 exchanges consist of apartments, other property types can include various commercial properties like office buildings. 

You'll probably need to invest at least $100,000 to get involved with a DST 1031 exchange

If you're interested in getting involved with DST 1031 investments, you should know that $100,000 is often the minimum required investment for these arrangements. 

DST 1031 exchanges help investors to invest in real estate while avoiding a lot of the resulting complications of actively managing real estate properties

Traditional real estate investing in rental properties or in flipping homes involves a lot of work. It is a very "hands-on" type of investment. 

On the other hand, investing in a DST 1031 exchange creates a situation where the investor makes money without having to actively handle management tasks. In a DST 1031 exchange, many investors pool together their resources to employ professionals who handle the management tasks.