The Delaware Statutory Trust (DST) 1031 exchange investment strategy is catching the eye of many real estate investors across the United States. Several factors contribute to this surge in popularity, including aging demographics, lackluster returns from conventional banking investments, and the desire to defer capital gains taxes associated with real estate appreciation. Notably, since 2004, approximately $20 billion has been amassed through securitized 1031 co-ownership, primarily structured as Delaware Statutory Trusts, as reported by Globest.com. This trend underscores the appealing aspects of DSTs, which offer a range of benefits to investors.
However, as is the case with any real estate-related investment, Delaware Statutory Trusts have their set of risks as well as benefits. Prospective investors are advised to diligently study the offering’s Private Placement Memorandum to comprehend the complete business strategy and risk factors before contemplating an investment.
Readers can learn more about exactly what is a Delaware Statutory Trust is in this article.
This article delves into the potential advantages accessible to investors utilizing DSTs for their 1031 exchanges, along with a few drawbacks that should be considered. Before exploring the merits of a DST, it’s pivotal to clarify the concept of a DST 1031 exchange.
A Delaware Statutory Trust stands as an entity qualifying as “like-kind” real estate, crucial for successfully completing a 1031 exchange, and thereby deferring capital gains taxes when relinquishing an investment piece of property. There are several advantages of a 1031 exchange Delaware Statutory Trust properties for real estate investors, especially the following:
*Diversification does not guarantee returns and does not protect against loss.
Among some of the benefits of DST 1031 exchanges as outlined above, there also exists a set of associated risks. As always, it is strongly recommended that investors meticulously study the risk section of the Private Placement Memorandum (PPM) and consult tax and legal advisors before considering a DST 1031 investment.
While Delaware Statutory Trust investments strip investors of direct managerial control, they benefit from the DST trustee’s adherence to the IRS regulations, outlined in the Seven Deadly Sins. Consequently, selecting the best Delaware Statutory Trust 1031 advisory firm becomes pivotal when contemplating such an exchange.
For comprehensive insights into DSTs and 1031 exchanges, visit to kpi1031.com Readers can access an extensive list of resources including current articles, informative videos, and the ability to subscribe to The DST Digest Magazine. Additionally, by completing a form on the website, one can obtain a free book on Delaware Statutory Trust properties and 1031 exchanges, along with a complimentary list of current 1031 DST properties.
There are material risks associated with investing in real estate, Delaware Statutory Trust (DST)properties, and real estate securities, including illiquidity, tenant vacancies, general market conditions, and competition, lack of operating history, interest rate risks, the risk of new supply coming to market and softening rental rates, general risks of owning/operating commercial and multifamily properties, short-term leases associated with multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. All offerings discussed are Regulation D, Rule 506c offerings. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential distributions, potential returns, and potential appreciation are not guaranteed. For an investor to qualify for any type of investment, there are both financial requirements and suitability requirements that must match specific objectives, goals, and risk tolerances. Securities are offered through FNEX Capital, member FINRA, and SIPC.