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Understanding the Differences Between ROE and ROI in Real Estate. In the realm of real estate investing, two of the most discussed metrics are Return on Equity (ROE) and Return on Investment (ROI). While both are essential for evaluating the performance of an investment, they serve different purposes and offer unique insights. This article explores the differences between ROE and ROI in the context of real estate, helping investors understand how to use these metrics effectively to make investment decisions.

Investing in real estate through Delaware Statutory Trusts (DSTs) has become an increasingly popular strategy, particularly for those looking to defer taxes via a 1031 exchange. Debt-free DSTs offer a unique set of benefits that can make them an attractive alternative. However, it is important to take a close look at the structure, asset characteristics, and fees involved to assess the best option for each exchanger’s unique situation. This article offers a critical review of debt free DSTs. We will start off with the benefits.

Interest in DSTs continues to grow with 1031 exchange investors. A chief reason for the rising popularity is the turnkey, non-recourse debt that satisfies investors’ 1031 requirements without requiring the investor to apply or sign for the loan. Though there are clear potential benefits to investors who want or need to buy passive real estate with leverage, there are risks that are common to real estate and also unique to DSTs that should be understood prior to investing.

Investors selling a business, art, stock, or other non-real estate assets may want to consider a QOF, since the 1031 is no longer available to any asset class besides real estate. For real estate owners who would like to defer all their taxes indefinitely and potentially pass their assets onto their heirs tax free, a 1031 exchange and a DST investment may be more appropriate. Either way, there are various potential advantages for both investment vehicles. However, these are complicated tax strategies, and investors should first speak to their CPA/tax advisor prior to conducting a 1031 exchange or investing in a QOF to make sure it is appropriate for them and their families’ financial goals and objectives.

Historically, multifamily properties have been regarded as a reliable inflation hedge due to their ability to adjust rental rates in response to rising costs. During periods of inflation, landlords can increase rents to keep pace with the general rise in prices, ensuring that their income stream maintains its purchasing power. Additionally, the high demand for rental housing, driven by factors such as population growth and shifting demographic trends, tends to remain stable or even increase during inflationary periods.

The increase in retiring landlords has led to a surge in 1031 capital flowing into passive solutions like Delaware Statutory Trusts (DST) and Tenants-In-Common (TIC). These investors are typically drawn to the turnkey nature of 1031 solutions, investing in high-quality real estate with potential passive income.

A 1031 exchange, named after Section 1031 of the Internal Revenue Code, allows real estate investors to defer paying capital gains taxes when they sell an investment property and reinvest the proceeds in a like-kind property. This powerful tool can significantly enhance an investor’s ability to build wealth over time. However, to fully benefit from a 1031 exchange, it’s essential to understand and adhere to the specific rules and requirements governing the process.

Triple Net Lease (“NNN”) properties are often marketed as passive investments, appealing to those seeking stable, predictable income with minimal management responsibilities. These properties typically involve single tenants responsible for paying property expenses, including maintenance, insurance, and taxes. While NNN investments do offer several advantages, they are not as passive as they might seem. Here’s why:

Navigating the intricacies of a 1031 exchange can be challenging, especially when dealing with time-sensitive matters and complex financial details. To ensure a smooth process, it’s vital to thoroughly understand the role of your Qualified Intermediary (QI) and to ask the right questions. The following points highlight key inquiries you should make when selecting a QI, from understanding their fees and insurance coverage to ensuring reliable communication and the secure handling of your funds.