There are a number of potential Delware Statutory Trusts Benefits. As a real estate investor, reviewing the potential benefits and potential risks prior detail prior to investing.
Potential Advantages of Delaware Statutory Trusts
Delaware Statutory Trusts are attractive for the following reasons:
Diversification
Investors can select multiple Delaware Statutory Trust properties as part of their 1031 exchange allowing diversification of asset classes, cities and level of needed non-recourse debt.
Lower Minimum Investments
Delaware Statutory Trusts have lower minimum investments often as low as $100,000 of equity. If you require a lower investment amount than the stated minimum, let your Corcapa 1031 Exchange representative know and we may be able to negotiate a reduction in certain circumstances.
No Individual Annual LLC Filings
Potentially lower fees in Delaware Statutory Trust investments than Tenants-in-Common investments. The DST investment does not require a special purpose LLC entity that needed to be annually maintained and paid for.
Potentially Greater Cash Flow
The most common reason that investors select Delaware Statutory Trusts is for a potentially greater cash flow than they are currently receiving. Most DSTs have between a 4.00% – 5.50% projected cash flow based on the anticipated rental income less expenses. For example, if you invest $1,000,000 of equity into a DST with a 4.5% projected cash flow, this would provide a projected net annual income of $45,000. This could be a higher net cash flow than you are currently receiving on your rental property. As with all real estate, the income cannot be guaranteed because the rental income and expenses can increase or decrease unexpectedly.
Non-Recourse Loans
Virtually all the loans within the DSTs that are approved by DAI Securities, LLC are non-recourse which means the investor does not personally guarantee them.
Financing Access
Easier access to financing for investors needing debt on their replacement property and potentially quicker closings.
Larger Property Access
Access to Institutional Grade properties which are typically larger commercial properties that previously required significant capital to purchase.
Questions about Delaware Statutory Trusts?
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