Delaware Statutory Trusts vs. Non-Traded REITs: Structural Differences Explained
Many passive real estate investment options exist nowadays, providing investors with a wide range of choices based on their needs and investment goals. Two popular avenues are Delaware Statutory Trusts (DSTs) and non-traded real estate investment trusts (REITs). Both offer benefits like passive income and enhanced diversification, but they have fundamental structural differences that affect 1031 Exchange eligibility, liquidity, cash flow, and lots of other critical considerations.
How DSTs Fit Into a Broader Passive Real Estate Portfolio
For many investors, building a passive real estate portfolio is an end goal. It’s how you keep earning income after retirement while also securing your wealth for future generations. There are many types of real estate assets that can help you create a passive portfolio, and Delaware Statutory Trusts (DSTs) are one of the most strategic additions.
How Inflation Affects Delaware Statutory Trust Returns
Delaware Statutory Trusts (DSTs) carry a lot of promise, especially for investors looking for passive income, enhanced diversification, and tax-deferral benefits. However, like any other real estate investment, DSTs can still feel the effects of economic realities like inflation. Whether you are already invested in a DST or considering one to end a 1031 exchange, understanding how rising prices influence both income and long-term appreciation is critical. This knowledge helps you prepare for these scenarios and weather them with confidence.
DST Cash Flow Stability: How Lease Terms and Tenant Types Matter
Many modern investors have recognized the appeal of Delaware Statutory Trusts (DSTs), with promises of enhanced diversification, tax-deferral benefits, and passive and predictable income. The latter is affected by two major factors: lease terms and the type of tenant occupying the property. These two variables are often overlooked when evaluating offering memorandums, but tenant type and lease terms can fundamentally affect the cash flow and risk profile of the DST.
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.
