Delaware Statutory Trusts And Increasing Uncertainty

If you are thinking about buying or 1031 exchanging into another investment property of your own, you had best think twice.  As mentioned in our previous article, DSTs and National Rent Control, (3/18/2023), Joe Biden has just added a new layer of uncertainty to your business idea.

The White House recently announced executive actions in conjunction with what it is calling a “Renters Bill of Rights.” (Washington Examiner 2/7/2023).  What this amounts to is a declaration of war on landlords at the national level.

Using the nearly unlimited resources of the Federal Government and their bureaucratic minions, the Federal Finance Agency (think Fannie Mae & Freddie Mac) will be looking for new ways to “limit egregious rent increases on properties it backs.” (Washington Examiner 2/7/2023).   Just when you thought it safe to go back in the water again…

Small and independent landlords across the board struggled to pay their mortgages and maintenance bills when the government back stopped tenants not paying rent, during the pandemic. Now your government wants to restart this engine of wealth destruction just as the PHE (Public Health Emergency) for Covid 19 is scheduled to expire May 11, 2023.

This is both bad policy and bad timing.  Many retail landlords have been cheated out of thousands of dollars in rent at some point in his or her business past by unscrupulous tenants.  Now Biden wants to enshrine this at the national level via Federal micromanagement of your property and the tenant screening process.

The obvious way to escape this tidal wave of bureaucratic meddling bearing down on you is to 1031 exchange out of rental housing into some other, historically less vulnerable commercial property type.

In our opinion, the easiest and most efficient way to do this is through the vehicle of Delaware Statutory Trust (DST) properties.  This may allow you to diversify functionally away from the multifamily sector and geographically to those parts of the nation that may be less willing to do the bidding of an activist and predatory federal government, i.e. red states.

However, if you remain emotionally wedded to multifamily, the institutional size and nature of DST offerings may provide you with greater resources, hence more ability to attempt to mitigate risk than you can afford yourself.

The fierce independence that most income property owners manifest was once a real asset.  It enabled them to chart their own course, assume the risk incumbent in this and reap the rewards from their hard work, good management and intelligent business decisions.

However, in the wake of an increasingly weaponized federal government it may become a real liability.  Individually, the inexorability of this regulatory intrusion may wear you down and out. 

By handing these responsibilities over to well capitalized and connected institutional investment entities, you may be better able to fight back.  DST property programs in their size and variety, offer you this opportunity.

Don’t fight the good fight alone.  Join Team DST now!


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