All Forum Posts by: Natalie Bender

Hello Zara, 

I am an investment consultant that focuses on Delaware Statutory Trusts. From what you mentioned DSTs may be exactly what you are looking for. However without knowing more about your experience, risk profile and financial objectives it is difficult to determine if theses products would be a good fit for you. I would be happy to discuss the ins and outs to determine if DSTs or other real estate strategies would be most suitable. Please DM me and we can connect.

@Harish M.

Your sellers only option to sell and defer the capital gains tax is via 1031 exchange. 

He should speak to his CPA as a sale even in installments will/ can trigger additional consequences. For example he will be required to pay not only capital gains but also depreciation recapture, the Obama tax (as mentioned above) and his medicare premiums will most likely go to the max for 2 years, longer if the sale is spread across different years. 

If he is not interested in purchasing more homes via 1031 exchanges you could suggest 1031 exchanging into passive real estate; specially Delaware Statutory Trusts. I have worked with several clients in your homeowners situation. DM me I would be happy to give you an overview that you can take to your owner. 

Wow Chris this sounds like one hell of a situation. You’d like to think you get what you pay for; however on this instance you seem to be over paying for hands off passive real estate.

If passive real estate is truly what you are searching for, have you considered 1031 exchanging into a DST (Delaware Statutory Trusts) or other rules of syndications? Note you must be an accredited investor to participate.

A con that turn some people off DSTs is they come with higher fees than out right owning a stable, low maintenance property; however based off what you described DST fees are far below what you are currently paying.

There are a few threads about DSTs on this platform, or I would be happy to give you an overview if you told like. DM or email me anytime. 

Good luck 

Josh has some great suggestions for you to look into. May I also add… diversification should be a may focus for income generation, think about a portfolio of investments. I would look into assets that are non-correlated to the stock market or real estate, as well as tax advantaged assets to help shelter your income. This way you always have a steady stream no matter where interest rates and inflation are.

Potential Options:

Mineral Rights

Private Credit 

Hello Michael,

I echo Jon, completing a 1031 of a single rental into DSTs in straightforward however we typically recommend a portfolio of DSTs for diversification and financial objective purposes. That would mean splitting the sale proceeds. Once you are in the portfolio, the likelihood the DSTs would all sell at the same time in 7-10 years approximately is extremely unlikely. Therefore being able to gathering all the parceled proceeds back together for the one large purchase would be almost impossible. And that’s just one property you are inquiring about 10 rentals, 10 exchanges, minimum 10 DSTs (unless you can sell a few properties at the same time).

I’m not sure DSTs would be the correct route. However I do have a few other ideas but I would need to know a bit more about your situation, timeframe, overall financial objectives. Send me a DM if you would like to talk more. 

@Arthur Savery there are some great comments already provided. I agree with what has already been said. Many investors will 1031 exchange into another property and list DSTs as a back up on the 45 identification form incase the property falls through. 

DM if you would like to discuss this strategy further. 

You could also look into DSTs for 1031 eligible fractional passive ownership of institutional properties. 

Here is a blog post from the Founder of my company that may speak to you. Would love to chat if you have any follow up questions.

https://www.biggerpockets.com/member-blogs/7993/48729-are-your-rental-properties-weighing-you-down

Thank you Tony for the shoot out.

Hello Isaac,

Taking the step from active landlord to passive investor can be scary and overwhelming. At Archer we pride ourselves on education, even if that results in DSTs not being the right fit for you.

Below is my contact information, please reach out and we can due a deep dive to see if DSTs is the right investment for your goals. 

BDs and Registered Reps are also registered with FINRA and must act as a fiduciary to their clients. We also complete due diligence and provide education to clients based upon their specific investment objectives. 

Greg Scott is correct, you will have to pay capital gains tax on any monies you take possession of. If you are under contract talk to a qualified intermediary immediately!! As for title, you need to 1031 exchange under the same name as the relinquished property. If that property is till under the LLC you will need to purchase under the LLC.

If you have taken ownership of the sale proceeds your next homework assignment is to look into Qualified Opportunity Zones and Qualified Opportunity Funds (QOZ, QOF), note the same accredited investor status still applies. 

A quick summary:   

A Qualified Opportunity Fund is an investment vehicle organized as either a partnership or corporation that holds at least 90% of its assets in Qualified Opportunity Zone property. QOFs can make investments in a wide variety of real estate and new or existing businesses, including commercial real estate, housing, infrastructure, and start-up businesses. QOFs can hold single or multiple assets. QOZ property includes interests held by the QOF in a Qualified Opportunity Zone Business (“QOZB”)

An investor has 6 months from the sale of a property to invest, and the rules permit actual receipt of the sale proceeds. You only have to invest the capital gain from the sale (partial capital gain investment is ok). Under the current law, the taxes would be deferred until 12/31/2026 and ultimately due by 04/15/2027. The QOZ community believes that there is bipartisan support to extend the deferral period.

If you remain in an QOZ for 10 years than any growth/appreciation on your original investment is returned tax free. For example, if you invested $100K and after 10 years the value of the investment is $200K, one could cash out the entire $200K tax free. 

Hope that helps!