what is a DST (Deleware Statuory Trust)?

• Diversification: DST investors can diversify their 1031 exchange funds not only by asset class but also across different geographic locations throughout the US.
• Lower minimum investment: DSTs often start at a minimum investment threshold of $100,000.
• Leaner fees that a TIC investment: This is possible mostly because a DST investment does not require a special purpose LLC entity, which carries its own annual maintenance fees and expenses.
• Potential for higher cash flow: DSTs have a projected cash flow based on the anticipated rental income of the underlying asset(s). Some DST investors will enjoy higher cash-on-cash returns via DSTs than they previously did with their relinquished investment property. It should be noted however that rental income and expenses can increase or decrease unexpectedly.
• Broader access: Access to larger commercial properties which typically require more capital outlay to invest in.
• Non-recourse LTV: Unlike a TIC investment, individual investors are not on the hook for any loan amounts built into the DST. Furthermore, loans are underwritten at the sponsor level and not on the individual investors themselves.
• Built-in Financing: For those investors that need to match up LTV on their exchange, the predetermined loan amounts native to some DSTs can make this requirement much less stressful.

 While Delaware Statutory Trusts (DSTs) offer a powerful opportunity to participate in institutional-quality real estate investments, it's important to recognize that, like all real estate holdings, they are influenced by market conditions. Property performance may vary from projections, and DSTs carry many of the same considerations and responsibilities associated with owning, selling, and operating real estate. That said, for many investors, DSTs present a strategic and tax-efficient way to diversify their portfolios while deferring capital gains through 1031 exchanges. As always, it's essential to evaluate each opportunity carefully with trusted legal and financial counsel. .

• Illiquidity: A DST interest is an illiquid investment and there is no current active secondary market for selling your fractional-ownership interest.
• DST investors do not hold title to the investor but rather own beneficial interests in the trust and the sponsor controls the selling and managing of the property. The DST owners have limited control over the investment and are reliant on the sponsor.
• The enabling IRS revenue ruling which forms the basis for a DST transaction in a Section 1031 exchange program has prohibitions on the powers of the trustee, which are built into the Trust Agreement and have become known as the “Seven Deadly Sins”.