The Realized Team’s Picks
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.
How Market Conditions Affect Delaware Statutory Trust Performance
When assessing Delaware Statutory Trusts (DSTs) as a possible alternative investment option for 1031 Exchange investors, it’s important to understand how different market conditions affect these trusts. Fluctuating interest rates, specific sector conditions, and inflation all affect the potential returns of the DST. A savvy investor will know how these factors affect the investment, and they’ll apply this knowledge to set expectations and prepare for any scenario.
DST Exit Scenarios: Refinance, Sale, or UPREIT Conversion
As an investor, your usual primary focus when investing in Delaware Statutory Trusts (DSTs) is the cash flow and tax-deferral benefits. However, there is one other aspect worth your scrutiny: the exit strategy. How and when you transition from the DST is crucial to your investment planning, especially if you’re entering through a 1031 Exchange.
What Happens When a DST Property Sells Sooner Than Expected
Beyond the passive income and tax-deferral benefits offered by Delaware Statutory Trusts (DSTs), investors find these investments appealing because of the promised predictability and stability. However, nothing is set in stone in real estate investing, and there are times when sponsors initiate a property sale before the agreed-upon holding period is over.
How Debt Structure Impacts Returns in a Delaware Statutory Trust
As Delaware Statutory Trust (DST) sponsors acquire assets to include in the DST portfolio, they will use leverage to fund the purchase. Some investors may not care about this detail as long as the DST can deliver its promised returns. However, debt structure can have a major effect on the returns of a DST investment.
The Life Cycle of a Delaware Statutory Trust Investment
Delaware Statutory Trusts (DSTs) hold a lot of promise, especially for investors who want benefits like tax deferral and access to income from institutional-grade assets. However, before entering one, it pays to be informed regarding all aspects of this investment.
DST Minimum Investment Requirements: What Determines the Entry Point
In recent years, Delaware Statutory Trusts (DSTs) have become a popular investment vehicle, offering income from institutional-quality assets while providing tax-deferral benefits. However, to enjoy these advantages, you must first meet DST investor qualifications. One of these is the minimum investment requirement.
