Delaware Statutory Trust Sponsors Advise Investors on Evaluating DSTs


The best way to enter a DST investment is to start by understanding all the details that go into the legal agreement. Delaware Statutory Trust sponsors advise investors to become familiar with DST benefits and guidelines in order to make informed decisions about their real estate investment. Delaware Statutory Trusts and 1031 Exchanges can prove to be an excellent opportunity for smaller investors who are looking to participate in commercial real estate that they wouldn’t normally have the means to afford. 

Delaware Statutory Trust sponsors explain that DSTs function within real estate property holding, management, and administration. They allow investors with smaller budgets to own a share of interest in commercial investments. 

Delaware Statutory Trust sponsors acquire properties in order to hold for future investors under DST agreements. Since there is no limit to how many people can share in a DST, this allows investors with smaller budgets to actually participate in Delaware Statutory Trusts and 1031 Exchanges. While TICs can only have up to 35 investors, a DST can have over 100. Also, 1031 exchanges can minimize or eliminate capital gains taxes which allows investors to take advantage of their full earnings for investment. 

There are many benefits that come with making a DST investment, which is why it is hard for some investors to decide which one will best fit their needs. Delaware Statutory Trust sponsors advise real estate investors to consider these particular elements when choosing a DST:

  1. When you are considering a DST, you should first look at the number of investors that are already participating and, thus, the size of the investment. If a DST has a large number of investors, the investment will be lower. You should refer to your own personal budget and see what level of investment you are willing to make before committing to anything on a grand scale. Some investment shares start at only $100K. 
  2. In order to plan for the future of your DST, you should focus on bank reserves. These will be useful if and when you need to accomplish any repair work on your DST. 
  3. Investors must be aware of the loan-to-value ratio in order to plan for the net revenue of property investment. This value can be measured in order to determine if it will be sufficient to cover loan repayments. As with any investment, you need to be aware of changing numbers in your budget.
  4. The next thing you should consider is the diversity of your investment portfolio. Will you be looking into multiple properties under a single DST or even multiple DST offerings? 
  5. Consider the longevity of the property. Will other investors be interested in this real estate after your investment term? What can you expect from the DST property long-term?

These are just some of the ways to begin understanding the quality of a DST investment. Be sure that you are well informed before entering into any real estate commitment and ask all the questions you need answering from financial advisors. 

We would like to remind you that even though we have researched this information and believe it to be accurate and true to nature, you should remember that every form of investment, which includes real estate is speculation by its nature.  This involves a risk of significant losses. Also, non-publicly traded private placements of securities can be liable to a necessary period of holding. They are designed for investors that are accredited already and will not need a liquid investment.