DSTs remove these limitations, enabling individuals to tax-efficiently transition equity from individual properties to diversified and passive real estate investment portfolios.
For example, in a single 1031 exchange you may be able to transition from actively managing a single rental property in your hometown, to having ownership interests in institutional-quality assets throughout the country. Examples may include large scale assets such as an apartment complex in Dallas, a distribution center in Atlanta, or a portfolio of self-storage facilities across the Midwest.
In this example, you may hold ownership interests in many properties, collectively worth hundreds of millions of dollars and achieve meaningful diversification by holding period, investment strategy, sponsor and more.
Diversification is a key tenant of Investment Property Wealth Management™. Proper diversification may allow investors to better manage risk and pursue superior risk-adjusted returns compared to actively managing concentrated positions in local properties.