RENT Magazine Q3 '23


Portfolio diversification* by geography and property types Oftentimes, 1031 investors are selling a property that comprises a substantial amount of their net worth because they want to reduce their potential risk. Rather than buying one property, such as another apartment building or one NNN building, they decide that investing into a diversified portfolio of DST 1031 properties with multiple locations, asset classes (property types) and tenants is a better fit for their goals and objectives. This is similar to how investors tend to invest retirement funds in mutual funds and Exchange Traded Funds (ETFs) as opposed to placing their entire retirement savings into the stock of one particular company. However, it is important to note that there are no assurances that diversification will produce profits or guarantee against loss. Long-term, non-recourse financing locked and in place to satisfy debt replacement requirements of the 1031 exchange A 1031 exchange requires you to take on replacement property with “equal or greater debt” to what you had in the relinquished property (the property you are selling). In today’s lending environment, it is often hard for investors to obtain non-recourse financing at an acceptable interest rate and terms. Since the DST 1031 properties’ sponsors typically have strong lending relationships, they are able to secure non-recourse financing at some of the best terms available in the marketplace. The DST 1031 investors are the direct recipient of financing terms that they would otherwise often not be able to obtain on their own.





Access to institutional-grade real estate

DST 1031 properties provide access to large, institutional-grade real estate that is often otherwise outside of an individual investor’s price point. For example, with the typical minimum investment of $100,000, investors are still able to purchase an ownership interest in large $20 million-plus apartment communities, $5 million-plus pharmacies or $15 million grocery stores. This allows investors access to a level of real estate that they would not have been able to exchange into before. That being said, we also have had many clients with very large 1031 exchanges opt to invest in DST 1031 properties because they did not want to place “all their eggs into one basket” by purchasing one single, large investment property.




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