How Do Top-Flight Investors Defer Taxes, Spot Opportunities, And Stabilize Incomes

The investment game, especially at the top, is all about managing large amounts of risk, curating educated investments, diversifying your portfolio, and often handling large sums of money. It’s also appealing to focus on flipping properties or trading stocks in search of short-term gains. But the investors who build lasting wealth, without giving half of it to the IRS or HMRC through legal means, often learn to play the game differently.

If you can look for ways to defer taxes, lock in steady income, and capitalize on opportunities that some might ignore, well, you’re considered a wise investor, no matter if you’re managing your own investments or a wider fund.

It’s true that stocks and bonds have their place, but you’ll find that investors often turn to real estate structures that provide long-term financial benefits for the most stability. Three of the most useful tools in line with this are Delaware Statutory Trusts (DSTs), UPREITs, and Non-Traded REITs. Each one offers a different way to keep more of what you earn while setting up a portfolio that can more easily limit the blowback of a fickle market, which has caught us all out at one point or another..

In this post we’ll look at some of these alternative investments and explain the approach behind them.

Selling a property usually comes with a pretty hefty tax bill, unless you find a way to defer it. That’s why DSTs have become such a popular option, because they allow real estate investors to sell a property and reinvest through a 1031 exchange, which generally allows you to postpone capital gains taxes while keeping the money working in real estate.

DSTs work as “passive investments”, meaning investors don’t have to manage tenants, repairs, or leasing, three of the most fickle approaches any landlord has to focus on. This is because they own a fractional share in a large commercial property, perhaps a high-end apartment building, industrial spaces, or offices, while a professional firm handles everything. This setup makes them appealing for those who want real estate income without the daily frustrations (and yes, there are many) of being a landlord.

As such, they’ve been growing in popularity, with investors pouring billions into them each year. In 2024 alone, DST offerings raised nearly $5.66 billion, showing that demand is still strong despite some pretty intensive shifts in the real estate market.

DSTs aren’t completely liquid, meaning you can’t cash out overnight, but for those looking to keep their tax bill low and their money in real estate, they offer one of the most worthwhile ways to move from one investment to the next without taking a major tax hit.

UPREITs (Umbrella Partnership Real Estate Investment Trusts) can be a sharp investment to make also. In this case, instead of selling that one property outright, some owners can exchange it for shares in a REIT, which lets them defer those aformentioned taxes while gaining exposure to a broader real estate portfolio.

This setup is generally perfect for investors who want more diversification and liquidity than direct property ownership can offer, and is especially useful for first-time investors into a scheme like this. That also means you invest some of the usual risks that come with property ownership, as an UPREIT will spread your investment across multiple properties, meaning you don’t have to fret about one asset and its value, and you can enjoy a steady return on top of it.

Publicly traded real estate investment trusts (REITs) are defined by the stock market, which can be nerve-wracking for investors looking for consistency over volatility. Sure, the real estate market is generally pretty stable compared to others, but anyone who was around in 2008 is going to be a little finicky. It’s hard to blame them for their caution.

That’s where non-traded REITs can be a good alternative investment because sch funds still invest in real estate, but they aren’t listed on stock exchanges, so their value isn’t swinging wildly based on market sentiment.

That stability has made this one of the most popular investments to make, as even though publicly traded REITs took a 6.7% downturn in late 2024, non-traded REITs held quite calmly, even showing slight gains. You’ll find that they function more like the more common real estate investment metrics, as the values are based on property performance as opposed to those daily market changes. Some might even call it a much more reasonable investment despite their alternative statement. Just keep in mind that non-traded REITs aren’t completely liquid.

Those who try to build wealth through quick investments or are happy to take on more risk for more gain can certainly employ good reasoning and perhaps even make out well. We often consider some of the best investors of all time in this category, because, well, it’s more romantic to do so. But often, alternative investments and long-haul thinking, with practices and schemes that allow you to defer taxes, make use of new, steady opportunities, and help manage risks are considered wiser. This gives you the grounding to invest how you like from then on.

It’s why using the above tools like DSTs, UPREITs, and non-traded REITs can be so helpful, because they help you limit panicked or reactionary decisions, and hedge against a changing market, especially given the political reality of the new era most of the modern marketplace is contending with.

With this advice, we hope you can at least take another look at your investment strategy, think through the stability of your investments, and perhaps even direct a few of your own personal investments into new funds opposed to only using conventional methods to grow your money. In the long run, this could help you better solidify your wealth and diversify it so market downturns, especially in unpredictable times, affect you much less than they would otherwise.