Like many important investment topics that require questions and answers, Delaware Statutory Trusts (DSTs) are no different. While they may sound complicated and overwhelming, they are a fairly streamlined concept with the potential to increase net worth for an investor. Following are the answers to the 5Ws of a DST. If you identify with any or all these questions and answers, you may want to consider this type of real estate investment. And if you do, please visit www.diversified1031.com for more information.
WHAT is a DST?
A Delaware Statutory Trust is a type of trust structure created under the laws of the state of Delaware used as a vehicle for investment in real estate properties like multifamily units, commercial property, self-storage, student housing, senior living, etc. A DST allows multiple investors to pool their funds and hold ownership in a portfolio as beneficiaries of the trust, while a trustee manages the property on their behalf. Basically, it allows the potential benefits of owning real estate without the day-to-day issues that can accompany it.
WHO is the ideal investor for a DST?
An ideal investor for a Delaware Statutory Trust (DST) can vary, but generally, a DST can be attractive to passive accredited investors who are seeking an investment with the potential for income and long-term appreciation. These investors often include individuals nearing retirement. Additionally, because of the structure of a DST, it can be suitable for 1031 exchange investors looking for a tax-deferred investment opportunity. Those who may benefit from a DST include investors:
- Looking for higher quality investment grade assets
- Tired of day-to-day property management and maintenance
- Living too far away from their rental property to manage properly
- Interested in potentially greater passive income*
- Wishing to transition from active to passive ownership
- Nearing the end of their 45-day ID period
- Needing a backup plan for their replacement property
WHY should I invest in a DST?
There are several reasons you may consider a DST investment property including:
- Passive income potential: DSTs typically invest in income-generating real estate assets, offering the potential for passive income to investors.
- Diversification: DSTs provide an opportunity to invest in a portfolio of real estate assets, allowing investors to diversify their investments helping to reduce risk.
- Professional management: A DST is managed by professional real estate investment managers, freeing investors from the time and effort required to manage individual properties.
- Potential tax benefits: DSTs may offer tax benefits, such as the ability to defer capital gains tax through a 1031 exchange.
WHEN should I work with a financial professional?
Investing in a DST is not without risks. It is important to carefully consider the specific DST and its investment objectives, as well as the real estate market conditions and economic factors that may impact your investment. Diversified Investment Strategies has 20+ years of experience in facilitating these 1031 exchange investments, and guide investors through the process step by step.
WHERE can I find out more information?
We have written case studies and multiple articles on DSTs which can be found on our website. We also provide free consultations and tax investment analysis to help investors determine if this is an investment that may potentially be a good choice for them. Visit our websitewww.diversified1031.com to learn more..
Diversified Investment Strategies represents a team of experienced and trusted professionals specializing in real estate investment and services – including buying, selling, leasing, retirement planning and wealth growth and management through strategic, informed investment choices and a meticulous real estate investment analysis. As knowledgeable replacement property professionals, they help clients build a customized strategy that identifies suitable investments pursuing successful completion of a 1031 Tax-Deferred Exchange. www.diversified1031.com/ 866-261-0104.
*Potential cash flow, returns and appreciation are not guaranteed.
Because investor situations and objectives vary this information is not intended to indicate that an investment is appropriate for or is being recommended to any individual investor. This is for informational purposes only, does not constitute individual investment advice, and should not be relied upon as tax or legal advice. Please consult the appropriate professional regarding your individual circumstance. There are material risks associated with investing in DST properties and real estate securities including liquidity, tenant vacancies, general market conditions and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short term leases associated with multi-family properties, financing risks, potential adverse tax consequences, general economic risks, development risks, long hold periods, and potential loss of the entire investment principal. DST 1031 properties are only available to accredited investors (typically defined as having a $1 million net worth excluding primary residence or $200,000 income individually/$300,000 jointly of the last two years; or have an active Series 7, Series 82, or Series 65). Individuals holding a Series 66 do not fall under this definition) and accredited entities only. If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney. Diversification does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk. Diversified 1031 does not offer legal or tax advice. Please consult the appropriate professional regarding your individual circumstance. Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Diversified 1031 is independent of CIS. For Accredited Investor Use Only