Direct Ownership
- Direct ownership refers to purchasing a property outright. The investor has complete control over the property, and they can set rent prices, make improvements, and hire property managers. Direct ownership allows the investor to benefit from appreciation in the property’s value and tax benefits.
- Direct ownership also allows for leverage, as investors can take out a mortgage to purchase the property. It means that investors can buy a property with a smaller down payment and use the rental income to repay the mortgage over time. Eventually, this can result in higher returns on investment than DST investing, which typically does not allow for leverage.
- However, direct ownership also comes with its risks and challenges. For example, the investor is responsible for all the expenses associated with the property, including maintenance and repairs. However, this can be time-consuming and expensive and may not be suitable for investors needing more expertise or time to manage a property.
DST Investing
- DST investing is a passive investment that allows investors to own a fractional interest in a real estate property. The DST sponsor manages the property and decides how to generate income. Moreover, this may be a huge advantage for investors who need more time and skills to maintain a property.
- DST investing allows for diversification, as investors can invest in multiple properties through a single trust. Thus helping spread risk and provide more stability to an investor’s real estate portfolio. DST investing is a form of real estate investment trust (REIT), which is not subject to the same tax rules as traditional real estate investments.
