DST (Delaware Statutory Trust) Real Estate Investments are a way to share in the ownership of institutional-grade Real Estate – with no management responsibilities. A DST is a separate legal entity formed as a trust under Delaware law. The investor will obtain an undivided interest in the asset(s) held by the DST.
DST investments can be purchased as the Replacement Property(s) in a 1031 Tax-Deferred Exchange (often a $100,000 minimum purchase), as early as 3-5 business days after closing on the relinquished property, thereby deferring capital gains taxes on the sale. As financing on the DST property is already in place, there is no need to obtain a mortgage on a replacement property.
In addition, DST investments can also be purchased outside of 1031 Exchange transactions – as stand-alone cash investments (typically a $25,000 minimum purchase).
The loan is nonrecourse to the investor because the DST is the single owner and borrower, and the lender only underwrites the DST, not each individual investor. In comparison, directly purchasing an entire property may require an investor to arrange for financing and provide personal guarantees.
The transfer of beneficial interests in a DST is often easier than buying a property directly due to requiring less paperwork and time.
With a typical minimum investment of $100,000, investors have more flexibility to diversify their exchange (compared to buying a property directly).
Cash investors (non-1031) have the option to complete a 1031 tax-deferred exchange when the current property is sold.
Any real estate investments are subject to market value and rental income fluctuations, tenant issues, vacancies, taxes and governmental regulations. There are costs and fees associated with a DST investment and management; one must weigh the tax benefits against the investment costs.
Tax laws can change, which may have a negative impact on a DST investment.
A DST owner does not maintain management control or dictate day-to-day property management operations, which, while relieving the DST owner of those responsibilities, could cause one to run into issues with a property’s management. Additional governmental regulations that affect the management of the property and your ownership interest regulate DST ownership. It is important to investigate and gain a thorough understanding of these issues before investing.
DST Investments involve risk. No public market is likely to exist for such investments, they are not freely transferable and substantial restrictions may apply to the transfer of interests.
DST Investments are only available to accredited investors.
For more detailed information, visit our Brochures page.
