Delaware Statutory Trusts (DST’s): A Hands-Off, 1031 Compliant Investment

Real estate investors in the US are increasingly turning to Delaware Statutory Trusts (DSTs) as a preferred investment option. The combination of aging demographics, low returns on traditional banking investments, and skyrocketing real estate values has contributed to DSTs’ growing popularity. According to Globest.com, DSTs have raised around $20 billion in securitized 1031 co-ownership since 2004. This indicates that DSTs are gaining ground, and rightfully so, as they offer several potential benefits to investors.

That large private capital companies are investing in real property, installing professional management and giving the investor an opportunity to have a fully managed stake in a real property situation. There are many providers, one that I have had positive experiences with is Inland Private Capital Company.

However, like all investments related to real estate, DSTs have their share of pros and cons. Individuals that sell DST’s can only sell to accredited investors, and must read the Private Placement Memorandum carefully and assess the risks and business plan before considering an investment. I am a Realtor and do not have a Series 22 securities license, therefore I do not receive any compensation for referring to DST providers. We do it for the fiduciary long-term relationship with the client if DST’s are the best investment for the individual investor.

This article delves into the advantages that DSTs offer to investors in their 1031 exchange, along with the disadvantages they should consider. But before we discuss the benefits of DSTs, let’s understand what a DST 1031 exchange is.

Delaware Statutory Trusts (DSTs) have emerged as a popular tool for investors looking to defer capital gains taxes when selling their investment property. The way it works is simple – investors use the proceeds from the sale of their relinquished property to purchase a beneficial interest in high-quality institutional real estate that is professionally managed. This move allows them to defer their capital gains tax, which is a huge benefit for investors seeking to preserve and build their wealth.

Although it may take some time, investors can also exchange their DST into a REIT (via a 721 UPREIT) if they wish, but the process can be quite lengthy. There are undoubtedly both pros and cons to utilizing DSTs, which we will delve into later. Nevertheless, when used effectively, DSTs can be an excellent way to defer capital gains taxes and make the most of real estate planning.

If you’re wondering what types of real estate property can be structured as replacement property in a DST 1031 exchange offering, the options are many. They include net leased retail, industrial, multifamily, office, self-storage, and more. All in all, DSTs offer a great way to defer capital gains tax and build wealth through real estate investment.

Are you interested in learning more about how to maximize the benefits of a Section 1031 Exchange with the use of a Delaware Statutory Trust (DST)? As a lead generation expert, I can provide you with valuable information and guidance on how to take advantage of this powerful tool for your real estate investments, keeping in mind I get no commission or financial incentive. My value is in the client and the long-term relationship.

With a DST, you can invest in institutional-grade properties without the hassle of property management. You can also enjoy the potential for steady income, capital appreciation, and tax advantages through depreciation deductions.

Whether you’re looking to defer capital gains taxes, diversify your portfolio or gain access to larger investments, DSTs can offer a range of benefits that make them a compelling investment option.

Don’t miss out on the potential advantages of DSTs. Call or email me today to learn more.Pr