As an astute real estate investor, you’ve worked hard to accumulate wealth. Much of your financial net worth is tied up in your investment real estate. Now you are at a stage in life where you want to exchange active day-to-day property management for passive ownership.
The key to a successful 1031 exchange is achieving critical alignment between tax deferral and investment fundamentals. At its core, a 1031 exchange should be an investment strategy first, and a tax strategy second. When analyzing a 1031 investment strategy, it is imperative to match the investor’s investment objectives with the risk profile of the real estate.
Most investors are looking for five things in their 1031 exchange:
- Access to quality replacement properties
- Immediate identification and closing
- Capital preservation
- Durable, sustainable, and predictable income
- Potential for capital appreciation
It is critical to work with a real estate investment professional who objectively understands your investment goals and risk tolerance, and can align these goals with suitable 1031 replacement properties. This requires both quantitative and qualitative property analysis to stress-test property investments for optimized performance outcomes.
Delaware Statutory Trusts (DST’s) are a pre-structured and professionally managed 1031 replacement property solution that allows investors to quickly and easily analyze properties and sectors that fit their investment criteria. Because DST’s represent multiple asset types, industries, geography, and sponsorship, investors can build well-diversified portfolios of high quality, income producing real estate, without the headaches of active property management.