--- title: How Many Investors Can a DST Have? description: The basic concept of DSTs is that they allow multiple investors to each own a fractional interest in a single property. image: https://www.realized1031.com/hubfs/Images/Blog/older-couple-realestate-investors-is1285526690.jpg --- [![Realized 1031 Exchange Marketplace](https://www.realized1031.com/hs-fs/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black.png?width=240&height=80&name=Realized-Logo-Black.png "Realized 1031 Logo") ](https://www.realized1031.com/) - [Wealth Management Gap](https://www.realized1031.com/the-wealth-management-gap) - [Our Process](https://www.realized1031.com/how-realized-works) - [Financial Advisors](https://www.realized1031.com/advisor) - [Resources](https://www.realized1031.com/resources) - [The Company](https://www.realized1031.com/about-us) - [Articles](https://www.realized1031.com/blog) [Register](https://www.realized1031.com/marketplace) [Log In](https://www.realized1031.com/login) - Better Business Bureau Rating: **A+** - [FINRA BrokerCheck](https://brokercheck.finra.org/firm/summary/22333) - [Call](tel:1-877-797-1031) **(877) 797-1031** # How Many Investors Can a DST Have? Posted Nov 25, 2023 ![older-couple-realestate-investors-is1285526690](https://www.realized1031.com/hs-fs/hubfs/Images/Blog/older-couple-realestate-investors-is1285526690.jpg?width=750&height=500&name=older-couple-realestate-investors-is1285526690.jpg) Fractional investments in real estate using tools like Delaware Statutory Trusts (DSTs) are often attractive options for real estate investors who prefer not to be obligated to manage the day-to-day operations of their investment property actively. In fact, DSTs offer numerous potential advantages. Like any investment, potential participants should carefully evaluate the DST offering before investing. Let’s review how DSTs work: The basic concept of DSTs is that they allow multiple investors to each own a fractional interest in a single property. DSTs are created by a sponsor, who identifies and acquires the property or properties to be held in the trust. A Delaware Statutory Trust (DST) can have up to 499 individual investors. This provision allows investors to pool their money to purchase significant, institutional-grade real estate assets. ### Fractional ownership offers potential advantages. Because a[ DST structure](https://www.realized1031.com/blog/how-delaware-statutory-trust-ownership-structures-work) enables many investors to pool their funds together, the group can invest in real estate that the participants could not access independently. Each investor owns a share of the overall property and thus gets a proportional share of income and appreciation. In addition, DST participation offers some potential tax benefits, including employing a[ 1031 exchange](https://www.realized1031.com/blog/delaware-statutory-trusts-dsts-and-1031-exchange-requirements-what-you-need-to-know) to enter and exit the trust, thus deferring applicable capital gains taxes. DST investment amounts are frequently able to be customized, which offers a great deal of flexibility to investors who need to quickly invest a specific amount that matches the proceeds from a sale. Trust participants (beneficiaries) are protected against creditor claims because they are not personally liable for trust finances. The beneficiaries have no management oversight since the sponsor creates the trust and chooses the properties. ### DSTs also have some potential downsides. DSTs have low average minimum investment requirements, making them attractive to some accredited investors. However, many DSTs have higher fees, particularly acquisition and disposition costs and asset management fees. These costs may adversely affect the income distributed to shareholders. DST investments are illiquid, and investors may be unable to facilitate an early exit, so these vehicles aren't ideal if you need access to the funds. Potential investors should inquire about the holding period (often as much as ten years) and disposition strategy. ### DST rules impose limits on sponsor activities. Once the sponsor acquires and finances the properties held in the trust and sells the shares to investors, they can't obtain additional capital. Sponsors also may not renegotiate either loans or leases. Typically, the sponsor will lease the property in the trust to a master tenant, who will then oversee individual leases with tenants. Since the sponsor must distribute monthly or quarterly income to beneficiaries, they can't reinvest or retain cash. Despite these specific limits to what a sponsor can do, the sponsor’s qualifications and past performance are crucial considerations for potential DST participants since the sponsor chooses the properties for inclusion, arranges the financing, and also selects and contracts with the master tenant. It’s essential for a potential shareholder to[ research the sponsor’s qualifications](https://www.realized1031.com/blog/key-factors-to-examine-when-reviewing-a-delaware-statutory-trust-dst-investment) and experience, including how long they have been a real estate professional, their record of asset management in multiple economic environments, and the sponsor’s financial strength. This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Realized does not provide tax or legal advice. This material is not a substitute for seeking the advice of a qualified professional for your individual situation. No public market currently exists, and one may never exist. DST programs are speculative and suitable only for Accredited Investors who do not anticipate a need for liquidity or can afford to lose their entire investment. Costs associated with a 1031 transaction may impact investor's returns and may outweigh the tax benefits. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. 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Like any investment, potential participants should carefully evaluate the DST offering before investing. Let’s review how DSTs work: The basic concept of DSTs is that they allow multiple investors to each own a fractional interest in a single property. DSTs are created by a sponsor, who identifies and acquires the property or properties to be held in the trust. A Delaware Statutory Trust (DST) can have up to 499 individual investors. This provision allows investors to pool their money to purchase significant, institutional-grade real estate assets. Fractional ownership offers potential advantages. Because a DST structure enables many investors to pool their funds together, the group can invest in real estate that the participants could not access independently. Each investor owns a share of the overall property and thus gets a proportional share of income and appreciation. In addition, DST participation offers some potential tax benefits, including employing a 1031 exchange to enter and exit the trust, thus deferring applicable capital gains taxes. DST investment amounts are frequently able to be customized, which offers a great deal of flexibility to investors who need to quickly invest a specific amount that matches the proceeds from a sale. Trust participants (beneficiaries) are protected against creditor claims because they are not personally liable for trust finances. The beneficiaries have no management oversight since the sponsor creates the trust and chooses the properties. DSTs also have some potential downsides. DSTs have low average minimum investment requirements, making them attractive to some accredited investors. However, many DSTs have higher fees, particularly acquisition and disposition costs and asset management fees. These costs may adversely affect the income distributed to shareholders. DST investments are illiquid, and investors may be unable to facilitate an early exit, so these vehicles aren't ideal if you need access to the funds. Potential investors should inquire about the holding period (often as much as ten years) and disposition strategy. DST rules impose limits on sponsor activities. Once the sponsor acquires and finances the properties held in the trust and sells the shares to investors, they can't obtain additional capital. Sponsors also may not renegotiate either loans or leases. Typically, the sponsor will lease the property in the trust to a master tenant, who will then oversee individual leases with tenants. Since the sponsor must distribute monthly or quarterly income to beneficiaries, they can't reinvest or retain cash. Despite these specific limits to what a sponsor can do, the sponsor’s qualifications and past performance are crucial considerations for potential DST participants since the sponsor chooses the properties for inclusion, arranges the financing, and also selects and contracts with the master tenant. It’s essential for a potential shareholder to research the sponsor’s qualifications and experience, including how long they have been a real estate professional, their record of asset management in multiple economic environments, and the sponsor’s financial strength.", "articleSection" : [ "Delaware Statutory Trusts (DST)" ], "author" : { "@type" : "Person", "email" : "marketing@realized1031.com", "image" : "", "name" : "The Realized Team", "url" : "https://www.realized1031.com/blog/author/the-realized-team" }, "dateModified" : "2023-11-25T15:52:02+0000", "datePublished" : "2023-11-25T15:52:02+0000", "description" : "The basic concept of DSTs is that they allow multiple investors to each own a fractional interest in a single property.", "headline" : "How Many Investors Can a DST Have?", "image" : { "@type" : "ImageObject", "height" : 500, "url" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/Images/Blog/older-couple-realestate-investors-is1285526690.jpg", "width" : 750 }, "mainEntityOfPage" : "https://www.realized1031.com/blog/how-many-investors-can-a-dst-have", "name" : "How Many Investors Can a DST Have?", "publisher" : { "@type" : "Organization", "address" : { "@type" : "PostalAddress", "addressCountry" : "USA", "addressLocality" : "Austin", "addressRegion" : "TX", "postalCode" : "78701", "streetAddress" : "500 W 13th Street " }, "logo" : { "@type" : "ImageObject", "height" : 60, "url" : "http://www.realized1031.com/hubfs/Images/Brand/Logo/Realized/Realized-Logo-Black-No-Margin-296x60-AMP.png", "width" : 296 }, "name" : "Realized" }, "thumbnailUrl" : "https://733513.fs1.hubspotusercontent-na1.net/hubfs/733513/Images/Blog/older-couple-realestate-investors-is1285526690.jpg" } ```