At Kay Properties & Investments, we specialize in DSTs, offering a variety of qualifying properties. However, if you’ve never invested in a DST, you may have questions regarding what it requires, its benefits, or even simply, what does DST stand for? To see if a DST investment may be right for you, we break down what it entails and what is has to offer investors.
What is a DST?
Created as a trust under Delaware statutory law, a Delaware Statutory Trust (DST) is a separate legal entity acting as a fixed investment trust, that acquires and maintains assets such as securities, real estate, etc. In 2004, under the IRS Revenue Ruling 2004-86, DSTs were blessed by the IRS to qualify as a like-kind property for the purposes of a 1031 exchange. They have since been vastly popular because of their allotted passive ownership and have become the most preferred investment vehicle for 1031 exchanges due to the many benefits they offer investors. With a typical minimum investment of $100,000 investors may purchase units of interests in a DST and participate as beneficial owners of the property. Ranging from large apartment complexes and healthcare facilities to industrial and net-leased real estate, DSTs offer investors the chance to participate in higher-grade real estate investments that they often normally wouldn’t be able to afford. This allows them the opportunity to further distribute their exchange proceeds among multiple properties and to increase their diversification*.
Benefit Potential of a DST
Being that a DST is not considered a taxable entity, all of its profits, losses, etc. are passed on and distributed to its beneficiaries without landlord duties, resulting in what is perhaps the greatest potential benefit of a DST – the passivity it allows investors. Due to its structure, investors of a DST can participate in certain types of real estate without having to manage or hold title to them; meaning the properties are professionally managed, upkept, and maintained by a separate, experienced party and therefore grants investors more freedom and no management responsibilities while still potentially benefiting from its monthly income. Additionally, DST property investments often have diverse leverage amounts, which can not only facilitate an investor taking on equal or greater debt, but often to the exact amount they would like to take on. When compared to typical loan to value (LTV), DSTs may be available at lower LTVs, including all cash / no debt to rid the transaction of all financing risks. Kay Properties & Investments is a wealth advisory firm with a particular focus on DSTs. Call us today at 1-(855) 899-4597 to start your investment and receive a free list of our currently available DST properties.*Diversification does not guarantee profits or protect against losses.