Using Risk Budgets for Passive Real Estate
As any seasoned investor will tell you, the art of investment isn’t just about maximizing returns – it’s about managing risk. For property owners transitioning from active management to passive real estate investments, this is a lesson well learned on both Wall Street and Main Street. Utilizing a risk budget approach in passive real estate can be key to safeguarding one's portfolio against volatile market shifts while ensuring consistent growth and income.
Income Targeting vs. Total Return in Passive Property Vehicles
In the world of real estate investment, particularly when dealing with passive property vehicles such as Real Estate Investment Trusts (REITs) and Delaware Statutory Trusts (DSTs), investors must often choose between two distinct strategies: income targeting and total return. Each approach offers unique benefits and risks, suited to different investor goals and market conditions.
Inflation Linkage in Passive Real Estate
Inflation is a persistent concern for investors, particularly those with portfolios steeped in real estate. As prices of goods and services rise, purchasing power diminishes, posing risks to investments that do not appreciate alongside inflation. However, real estate, especially when managed passively, can offer a robust counterbalance to inflationary pressures, making it an appealing choice for savvy property owners.
The Passive Real Estate Spectrum: From Traded REITs to DSTs and Interval Funds
For investment property owners seeking a hassle-free way to maintain their real estate exposure, passive real estate investments offer an appealing array of options. Among the most prominent choices are Real Estate Investment Trusts (REITs), Delaware Statutory Trusts (DSTs), and Interval Funds. These vehicles allow investors to participate in the real estate market without the day-to-day demands of property management.
Building a Passive Real Estate Sleeve: Allocation Models and Rebalancing Considerations
Real estate investment is a popular choice for those looking to build a robust, passive income stream. As with any investment strategy, a thoughtful approach to asset allocation and rebalancing is central to maximizing returns and mitigating risks. Here, we explore effective allocation models and the nuances of rebalancing for those looking to create a passive real estate sleeve.
DST Reserves, Return of Capital, and Their Impact on Adjusted Basis
When you choose to invest in Delaware Statutory Trusts (DSTs) for tax deferral or passive income benefits, your attention is usually entirely on the tax benefits and profitability. However, the finer details (like reserves and return of capital) also deserve your close inspection, because these can affect your DST adjusted basis and, by extension, long-term tax outcomes.
Passive Losses and DSTs: What Happens to Suspended Losses After an Exchange?
Investors who want benefits like tax deferral and passive income find Delaware Statutory Trusts (DSTs) an appealing and suitable option. During your investment, however, you may encounter passive losses, particularly from the depreciation of the underlying DST properties. This accounting consideration raises a question: what happens to suspended losses after an exchange?
Meeting 1031 Debt-Replacement Requirements Using DST Financing
A 1031 exchange is a promising strategy that helps investors defer capital gains taxes while acquiring new property, but this transaction involves many rules. One important yet often overlooked aspect of the transaction is debt replacement, as it doesn’t always apply. However, for properties that do have debt, failing to replace it when acquiring a new asset can result in tax liability. Thankfully, solutions are available, including financing built for Delaware Statutory Trusts (DSTs).
How Zero-Coupon DST Loans Affect Basis, Cash Flow, and Exit
Delaware Statutory Trusts (DSTs) are a popular option for investors seeking passive income, enhanced diversification, and access to institutional-grade assets. Among the many considerations to keep in mind before entering one is the financing structure. Amortized financing is the most common, but some DSTs also use a zero-coupon loan structure.
Coordinating Your Qualified Intermediary and DST Sponsor: Paperwork, Escrows, and Assignments
In a 1031 exchange completed through a Delaware Statutory Trust (DST), two entities matter: the qualified intermediary and the DST sponsor. Seamless coordination must happen between the two to ensure compliance with IRS rules and increase the chances of a successful exchange. There are various key areas where these parties will need to work together. Let’s take a look at what you need to know as an investor.
