Why every real estate agent should know about the Delaware Statutory Trust (DST) 1031 Exchange
Let’s face it people always prefer to benefit from passive investment opportunities, and the Delaware Statutory Trusts offer them this possibility. Real estate investments bring multiple benefits, but if we are talking about 1031 exchange and DST then the advantages are even more. In the united stated this is one of the most common used strategies, because people are aware of the benefits they have. If you get involved into a passive management investment you have time to focus on the things that really matter for you. If you want to take some time away from your business, but you still need a source of income, then this is the perfect method. Here is why you should find more about DST if you are a real estate agent.
There are certain liability limitations
The trust managers, beneficial owners and trustees are protected when they opt for the Delaware Statutory Trust (DST) 1031 Exchange. You will benefit of the same level of liability protection as you would do if you would be a stakeholder of one of the Delaware corporations. The protection is applied no matter if you are a trustee present or not in within the Delaware. Also, if you are a manager you will not he considered responsible for the actions of the third parties.
The contract is flexible
When you get involved in a Delaware Statutory Trusts action you should know that you will decide how the contract will be created, because you are the one who decide it and the enforcement of trust agreements. The contract is flexible to offer you and the third parties involved the possibility to decide the specific matters that are important for you. You and the third parties are the ones who decide the obligations of the managers, their rights, the rights of the owners, the indemnification and the management of the trust.
The investment is a separate legal entity
The DST is separate from all the other investments you may have. You are a person who has a beneficial interest in the trust. You will decide the income tax liability. From 2004 a DST is able to obtain real estate, because the IRs decided so.
How it works?
A real estate sponsor company is the one that acquires the property for a DST purpose and them it opens it up to investors and real estate agents who want to purchase it in order to get income. As a real estate agent you have the possibility to either deposit your 1031 exchange proceeds into the DST or to buy an interest in the DST directly. You will take advantage of a professionally managed, potentially institutional quality property. The property can take multiple shapes, because there are countless possibilities. From apartment buildings to medical offices and shopping centres. If you would not use the Delaware statutory Trust you would probably not be able to afford the asset you will acquire this way. But this type you will collaborate with other investors, and you will not have any issue.