In this episode hosts Brandon Bruckman and Josh Wright, discuss the dynamics of Delaware Statutory Trusts (DST) investments. They address common questions about what happens once you invest in a DST and the potential outcomes.
Here's a summary of the key points:
Investment Process: Once you've invested in a DST and the transaction is closed, you'll receive a final closing statement, and your funds are officially in the deal. You start receiving income from the DST the following month, usually via a direct deposit to your bank account.
Passive Investment: As a DST investor, you become a passive investor in the real estate deal, and you have no ongoing responsibilities. Your primary role is to receive cash flow and income.
Regular Income: You'll receive quarterly reports from the DST sponsor, along with tax documentation for your annual tax reporting. This documentation simplifies tax-related tasks for your CPA.
DST Sale Notice: If the DST sponsor decides to sell the property, you will receive a notice with an estimated closing date and a closing statement.
Decision Making: At this point, you'll need to make a decision about how you want to proceed with your funds. Your choice could involve another 1031 exchange or receiving cash, depending on your financial goals and needs.
Market Conditions and Profit: The decision to sell a DST property is typically driven by market conditions and profitability. DST sponsors aim to maximize returns for investors, and if a good opportunity arises to sell, they may take advantage of it.
Timeframe: While the average holding period for DSTs is around eight years, it's essential to plan for a longer timeframe, as deals can vary. Investors should be prepared for various scenarios and outcomes.
The hosts also highlight the benefits of DST investments and how trapped equity can be released for reinvestment. They discuss the flexibility and potential returns that DSTs offer, making them an attractive option for passive real estate investors.
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