Investment Paths After a Farmland Sale
What Happens After You Sell? Your Investment Options
Selling your farmland is a big step. What happens next matters too. It can impact your family’s financial future and legacy. Today's market has many investment options. Each one varies in involvement, risk, and long-term effects. Here are your main options: direct ownership, Delaware Statutory Trusts (DSTs), Zero-Coupon DSTs, and blended strategies.
Direct Ownership
What it is: You buy another property completely. This is usually another farm, a commercial building, or rental real estate.
Pros:
Full control over management and decisions
Potential for higher returns through active management and improvements
Tangible asset with legacy value
Cons:
Requires significant time, expertise, and involvement
Concentrates risk in a single asset
Legacy Impact: Owning a physical asset lets you pass it down to heirs. This keeps a real link to land or property.
Delaware Statutory Trusts (DSTs)
What it is: A DST is a legal entity that holds title to investment real estate. Multiple investors own fractional interests, and professional managers handle all operations.
Pros:
Passive investment—no hands-on management
Diversification across multiple properties
Qualifies for 1031 exchange tax deferral
Cons:
Limited control over decisions
Illiquid—typically requires holding for 5–10 years
Legacy Impact: DSTs offer steady income and make estate planning easier. However, heirs receive a share in the trust instead of direct property.
Zero-Coupon DSTs
What it is: A special DST structure that offers no current income. However, it gives a larger payout at the end of the holding period. It's often used for estate or tax planning.
Pros:
Maximizes tax deferral and estate value
No annual income to report—potentially beneficial for certain tax situations
Fully passive
Cons:
No cash flow during the holding period
Locked in until maturity
Complexity may not suit all investors
Legacy Impact: Great for people who want to transfer wealth and cut taxes, not for earning current income.
Blended Strategies
What it is: It’s about mixing two or more methods. For example, you can combine partial direct ownership with DST investments. This helps balance control, risk, and liquidity.
Pros:
Customizes risk and involvement to your needs
Offers both steady income and growth potential
Greater flexibility for legacy and estate planning
Cons:
Requires careful coordination and planning
May involve more complex management
Legacy Impact: Blended strategies help keep income and asset value for heirs. They also let you adjust your involvement and risk.
Blended Strategies
Choosing the right investment path after a sale involves more than just numbers. It’s about matching your financial goals with your family’s needs and your legacy values. Avidity Capital’s Land Legacy Advisory team brings deep experience in real estate, tax, and estate planning. We help you:
Evaluate all available investment options
Model income, tax, and legacy outcomes
Coordinate with legal and financial advisors
Create a plan that honors your family’s story and secures your future
Ready to explore your next chapter? Connect with Avidity Capital today and let us help you chart the best investment path for your family’s legacy.
