Talk to an Advisor

How Does A DST Investment Work?

Learning Center Menu

DST stands for Delaware Statutory Trust, which is a legal entity that can be used as an investment vehicle in real estate. Here's how a DST investment typically works:

  1. A sponsor (typically a real estate investment firm) identifies a property to be acquired and sets up a DST to hold title to the property.
  2. The sponsor then sells beneficial interests in the DST to investors, who become fractional owners of the property.
  3. The investors contribute funds to the DST in exchange for their beneficial interests. These funds are used to acquire and manage the property.
  4. The DST owns the property, and the investors receive a share of the income generated by the property, usually in proportion to their ownership percentage.
  5. The investors typically do not have any direct control over the property or its management, as that responsibility lies with the sponsor or a designated property manager.
  6. When the property is eventually sold, the proceeds are distributed to the investors based on their ownership percentage.

DST investments are often used in 1031 exchanges, which allow investors to defer capital gains taxes on the sale of investment property by reinvesting the proceeds in a similar property. DSTs can be a convenient way for investors to diversify their real estate holdings and potentially achieve greater returns than they might with other types of investments. However, like any investment, DSTs come with risks, and investors should carefully review the offering documents and consult with a financial advisor before investing.

Relatable Articles

What Is a Delaware Statutory Trust & How Can Investors Benefit?

Are you looking to diversify your investment portfolio and potentially benefit from solid returns while reducing risk? Do you want to invest in real estate yet avoid the hassle of managing it personally? Then Delaware Statutory Trusts (DST) may be just what you need. DST is an increasingly popular real estate investing option for retirees […]

The Best Types Of Properties To Invest In Through A DST

Are you a real estate investor looking for the best properties to buy through a DST? If so, this post is for you! Investing in real estate through a Delaware Statutory Trust (DST) can be one of the most reliable and lucrative investments available—especially if you know where to look. Kicking off with an understanding […]

Have questions?

We'd love to guide you through the 1031 process, let us know how we can help!