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DST Due Diligence: What to Consider?
Although DSTs have been well received by investors as a viable replacement property option for 1031 exchanges, this type of investment should be more than a “plug-and-play” scenario. With the high velocity of deals and an ever-increasing number of sponsors looking to enter the market, due diligence is more important than ever to ensure you aren’t exposing yourself to unnecessary risk. In order to help you as an investor determine the good deals from the bad, this article addresses the integral questions you should always consider before investing in your next DST.
Can a DST Be a REIT?
DSTs and REITs both manage property for investors, but there are differences between them. They have very different structures with different operating mandates. Maybe another question is why an investor would want their DST to become a REIT. This is actually a valid question. Let’s answer this question and dig into the differences between these two investment vehicles.
How To Form A Delaware Statutory Trust
The state of Delaware has been a preferred jurisdiction for business entities since the early 1900s. Today, nearly 70 percent of all Fortune 500 companies are incorporated in “The First State,” and in 2019, there were almost 1.5 million legal entities registered in Delaware.
How 1031 Exchanges Work with Delaware Statutory Trusts (DSTs)
For real estate investors, managing capital gains taxes is one of the many challenges. It can be a good news/bad news scenario when you enjoy the appreciation of an asset and want to leverage the gain by reinvesting but are constrained by the need to pay capital gains taxes.
What Are the Delaware Statutory Trust (DST) Trustee Requirements?
A Delaware Statutory Trust (DST) is a prepackaged, professionally managed, passive real estate investment option for accredited investors. DSTs often have relatively low minimums, but they are illiquid, with holding periods typically ranging from five to ten years.
What is a Triple Net (NNN) DST?
Triple Net (NNN) leases and Delaware Statutory Trusts (DSTs) are essential options when investing in real estate. For this reason, we will briefly define the function of each and then dig into how they work together effectively.
How Many Investors Can a DST Have?
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.
DST Deals: What to Look for in a DST Offering
We have discussed the advantages of investing in Delaware Statutory Trusts (DSTs). But DSTs aren’t risk-free investments. Quite the contrary. DSTs are complex investment products, meaning you should consider multiple factors when finding – and selecting – the right trust to invest in.
How Do You Get Your Money Out of a DST?
DSTs (Delaware Statutory Trusts) are unique real estate investments that provide some potential benefits to investors, particularly those who are executing a 1031 exchange or simply want to transition from active investment to passive. Here is how a DST investment works:
How to Choose a DST Advisor
If you’re considering a Delaware Statutory Trust, you could find the array of offerings confusing, perplexing, and frustrating. Which DST is the right one for your risk tolerance and investment goals?
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