The Realized Team’s Picks
Environmental Due Diligence in DST Offerings
Before committing your capital to a Delaware Statutory Trust, it’s critical to conduct due diligence and risk assessment of the investment. This step is how you gain confidence that the trust is likely to deliver on its projections while ensuring tax-deferral benefits.
How Property Management Works Inside a DST
The passive nature of Delaware Statutory Trusts (DSTs) makes them appealing to many investors who want a more hands-off investment. While you’re not expected to take part in administration or operations, it’s crucial to understand how the underlying properties of the trust are managed. With this knowledge, you can better assess DST offerings and sponsors, ensuring that you’re committing capital to ones that can properly oversee the income-generating activities of the assets.
Capital Expenditures and Repairs in Delaware Statutory Trusts
Delaware Statutory Trusts (DSTs) source their income from the performance of the underlying properties. As such, the monthly income you earn has a direct relationship to the profitability of the real estate assets. What happens, then, if the property suffers damage or any other issue that may disrupt operations and cash flow?
How Interest Rate Fluctuations Impact DST Values
Delaware Statutory Trusts (DSTs) can be promising investments, especially for 1031 exchange investors who want tax deferral, passive income, and enhanced diversification. However, like any other type of real estate investment, DSTs are not immune to changing economic conditions.
Understanding DST Operating Restrictions Under IRS Guidelines
The main driver of success for a Delaware Statutory Trust (DST) investment is the performance of the underlying assets. As such, streamlined and optimized property operations are necessary to ensure that cash flow remains stable and consistent. Given the passive nature of DSTs and restrictions imposed by the IRS, the lines become blurred between what’s restricted and what’s allowed for both investors and sponsors.
DST Portfolio Composition: Single-Asset vs. Multi-Asset Structures
As an investor evaluating Delaware Statutory Trust (DST) offerings, you’re focused on aspects like tenant creditworthiness, sponsor experience, and projected financials to determine if the specific investment is worth it. However, there is one aspect that some investors don’t pay enough attention to: the DST portfolio composition.
DST Liquidity Myths and Secondary Market Realities
Entering a Delaware Statutory Trust (DST) generally means sacrificing liquidity for benefits like passive income and tax-deferral. However, there is a way to access your capital even before the holding period is over: selling to an interested buyer in the secondary market. This strategy is possible because of an emerging demand, but it’s still rife with misconceptions and uncertainties.
Diversification Strategies Using Multiple DSTs
Investors are drawn towards Delaware Statutory Trusts (DSTs) because, aside from passive income and tax-deferral status, these investment vehicles enhance diversification to another level. In real estate investing, diversification is the spread of capital across different assets to reduce exposure to a single risk. The nature of DSTs, which usually own multiple assets, makes them excellent avenues for those who prioritize diversification.
Understanding Tenant Credit Ratings in Delaware Statutory Trust Portfolios
Two major factors determine the profitability of a Delaware Statutory Trust (DST): the underlying property and the tenants leasing the asset. For the latter, one parameter that helps investors and sponsors assess the quality of the tenant is their credit rating. This is an objective grade that tells you about the financial strength of a company, which then informs whether or not they can earn enough to handle rent and contribute to DST portfolio stability.
The Role of Master Lease Agreements in DSTs
Delaware Statutory Trusts (DSTs) are complex investments involving a lot of moving parts. Thankfully, the passive nature of these trusts shields investors from the most complicated processes. Even so, it’s important to understand these more nuanced aspects, such as Delaware Statutory Trust leases.
