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Category Archives: DST Basics

Why Consider a DST or TIC For Your Next 1031 Exchange?

Many of my clients are individual investors, buying and selling real estate to grow their investment portfolios. One common question I hear from these clients is “how do I grow my investments faster?” They are concerned that the amount they have to invest on their own is simply not enough to achieve the long-term growth they desire. One option I often suggest is fractional or co-ownership in the form of a Delaware Statutory Trust (DST) or Tenancy In Common (TIC). Quite simply, this type of joint ownership allows an individual investor to acquire a larger and hopefully more profitable real estate asset than what they could have purchased with only […]

Risks Of A Delaware Statutory Trust

A DST offers an investor many benefits not found in other shared-ownership types of real estate investments. However, DSTs do not come without some risk – just like any other investment. One of the biggest risks to consider is the reliance on a program sponsor to manage the investment. Unlike a Tenancy-In-Common (TIC) where individual investors have a direct say, investors in a DST relinquish the day-to-day decision making authority to the program sponsor. This means that should the program sponsor make unwise decisions or become insolvent, the DST could fail without any meaningful input from the individual investors. Also, as with any investment, there are tax-related risks associated with […]

Benefits of a Delaware Statutory Trust

One of the main reasons investors are so interested in purchasing an interest in a DST is the benefit of owning securitized real estate. However, a DST provides other benefits to investors, as well. Eliminates Unanimous Approval Requirement Unlike a Tenancy-In-Common (TIC) ownership structure, a DST does not require the unanimous approval of all the investors to make decisions related to the held real estate. For example, should the economic environment require the quick sale of a parcel of real estate held by the DST, the decision-making authority to list or sell the property lies with the signatory trustee of the DST rather than the investors themselves. Limited Personal Liability […]

What Is A Delaware Statutory Trust?

A Delaware Statutory Trust (commonly referred to as a DST) is, as the name suggests, a legal entity created as a trust under Delaware state law. A DST is created for real estate investment purposes, and is especially useful in a 1031 exchange. Under a DST, investors each own a pro rata share of the DST itself. The DST in turn holds title to various real estate interests, and distributes any income received from the properties (either through rental income or the sale of the property) to the investors in proportion to their ownership share in the DST. The DST, via its signatory trustee, makes all decisions related to any […]