What is a DST (Delaware Statutory Trust) ?
DST Investment Provides Tax-deferment Benefit with no Burden of Property Management
A Delaware Statutory Trust or a DST is given mainly as real estate securities. It is extremely popular with 1031 Exchange investors. DST investments are passive real estate investments. They allow investors to get fractional possession in real estate properties. Investors do not need to bear the burden of property management. The structure for a DST investment was first created in Delaware in 1947. However, a DST doesn’t need to be located within the State of Delaware. DSTs are generally responsible for purchasing, managing, administering, and selling real estate properties. Investors within a DST enjoy their pro-rata share of income, appreciation, and tax benefits. 1031 DST Property offers similar benefits and risks as any other real estate investment.
Delaware Statutory Trust (DSTs) was formed more than 30 years ago, i.e., before "crowdfunding" came into existence, but that's in essence what they're for.
There are many ways to participate in 1031 exchanges without being the manager or sole owner of the portfolio of properties involved. They are available for many businesses and industries, including office space, multifamily and student housing, healthcare, and commercial real estates, such as retail storage units and drug stores.
Under DSTs, investors are partial owners, and much like the owners of mineral rights, they also get a percentage of the income the DST property makes depending upon how much of the trust part they have. The investor is a crowdfunded owner of the debt and equity.
DST sponsors put together the deals and offer a regular income for your investment. While, of course, you could lose money on those sales, too, you do get the tax benefits even in the improbable event the risk ends up with a loss of the entire investment principal.
And you will get the familiar 1098 and 1099 income and interest forms from the sponsor and profit and loss statements to calculate the depreciation in DST investment.
There are many sponsors and a couple of decades of experience in DSTs, so with solid research and trusted advisors, you can check track records while you analyze what providers and properties might suit your limit for risk and desire for a reward with this alternative investment.
Positives in a DST investment
✔ Low investment - A DST investment may start from as low as $100K.
✔ Large structure - There is no limitation on the number of investors a DST can possess. DSTs can have up to 499 investors or fewer. This opens the DST option for small investors also. Investors with low capital also prefer it. DST allows investors to acquire ownership in institutional-grade properties by making the least investment.
✔ Relief from property management- 1031 DST property is handled by property managers. Therefore investors do not have to bear the burden of property management.