--- title: "How to Evaluate Potential DST Properties: Key Metrics to Consider and Questions to Ask" description: Delaware Statutory Trusts (DSTs) offer a compelling entry into high-quality commercial real estate—especially for those executing 1031 exchanges. image: https://blog.wealthstonegroup.com/hubfs/WS-InsightsFI5.jpg --- - Client Portal [![Gold-Logo-1](https://blog.wealthstonegroup.com/hs-fs/hubfs/Gold-Logo-1.png?width=2000&height=380&name=Gold-Logo-1.png "Gold-Logo-1")](https://www.wealthstonegroup.com/) [![Wealthstone-logo-gold](https://blog.wealthstonegroup.com/hs-fs/hubfs/Gold-Logo-1.png?width=2000&height=380&name=Gold-Logo-1.png "Wealthstone-logo-gold")](https://blog.wealthstonegroup.com/) - [About](https://www.wealthstonegroup.com/about) - [Real Estate](https://www.wealthstonegroup.com/real-estate) - [1031 Exchanges](https://www.wealthstonegroup.com/real-estate/1031-exchanges) - [1033 Exchanges](https://www.wealthstonegroup.com/real-estate/1033-exchanges) - [721 Exchanges](https://www.wealthstonegroup.com/real-estate/721-exchanges) - 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However, given the pre-packaged nature of DST offerings, due diligence is essential. This blog breaks down the essential criteria and expert questions every investor should consider when evaluating potential DST properties. ### What to Look for in a DST Offering #### **1. Review the Offering Documentation (PPM) Thoroughly** The **Private Placement Memorandum (PPM)** is your primary window into the investment’s structure, risk, and revenue expectations. Though dense, it contains must-know details about the sponsor, financials, property specifics, and legal terms. Skipping or skimming this document is a red flag. **2. Sponsor Track Record Matters** Know who’s behind the offering. A trustworthy sponsor should have: - A demonstrable **track record**—successful DSTs across various real estate cycles. - **Specialization** in the sector (e.g., multifamily, industrial). - A reputation for **transparent communication** throughout the offering’s lifecycle. #### **3. Scrutinize Financial Projections for Realism** Projected cash flow, rent growth, and occupancy are often optimistic. Validate assumptions by comparing them against: - Third-party **appraisals** or **market comps**. - Local **market reports** or **economics** to ensure projections are grounded in current trends. #### **4. Understand the Fee Structure** DSTs are notorious for high fees. Typically, you'll encounter: - **Acquisition fees** - **Asset-management fees** - **Disposition or exit fees** Assess whether these costs are reasonable—or if they significantly dilute your returns. ### Additional Due Diligence Considerations from Industry Experts #### **Location, Tenant Quality & Lease Terms** - Examine **property class and market fundamentals**. - Look for long-term leases with **creditworthy tenants**, especially in recession-resistant sectors. #### **Exit Strategy & Liquidity Profile** - Clarify how and when the DST intends to exit (sale, refinance, etc.). - Given DSTs are illiquid, understanding the **exit timeline** and the sponsor’s ability to execute is critical. #### **Exit Scenario Awareness** DST exits vary widely—from strategic sales and refinancing to distressed dispositions. Each path carries different financial and tax outcomes: - A **strategic sale** may maximize value when markets align. - A **refinancing** may return capital sooner while retaining asset exposure. - **Distressed sales** can significantly undercut returns. Understand and evaluate each scenario as part of your due diligence. ### Final Thoughts Evaluating DST offerings isn’t simply a checkbox activity—it’s a strategic exercise. A diligent investor goes beyond surface-level appeal, focusing on the sponsor’s credibility, the underlying assumptions, fee transparency, and exit viability. The best DST investments balance meaningful upside with thoughtful planning and realistic expectations. ---   ### *General Disclosure* *This material is provided for informational and educational purposes only and is based on information from sources we believe to be reliable. However, its accuracy is not guaranteed, and it is not intended to be the sole basis for investment decisions or to meet specific investment needs.* *Wealthstone Group does not offer tax or legal advice. This content should not replace professional advice tailored to your individual situation.* *Not an offer to buy, nor a solicitation to sell securities. All investing involves risk of loss of some or all principal invested. Past performance is not indicative of future results. Speak to your finance and/or tax professional prior to investing. Any information provided is for informational purposes only. Securities offered through Arkadios Capital, member FINRA/SIPC. Advisory Services offered through Arkadios Wealth. Wealthstone Group and Arkadios are not affiliated through any ownership.* Topics: [Delaware Statutory Trusts (DSTs)](https://blog.wealthstonegroup.com/insights/tag/delaware-statutory-trusts-dsts) [1031 Exchange](https://blog.wealthstonegroup.com/insights/tag/1031-exchange) [721 Exchange / UPREIT](https://blog.wealthstonegroup.com/insights/tag/721-exchange-upreit) #### Share this [Share on X](https://x.com/intent/post?url=https://blog.wealthstonegroup.com/insights/how-to-evaluate-potential-dst-properties-key-metrics-to-consider-and-questions-to-ask&text=How+to+Evaluate+Potential+DST+Properties%3A+Key+Metrics+to+Consider+and+Questions+to+Ask) [Share on Facebook](https://www.facebook.com/sharer/sharer.php?u=https://blog.wealthstonegroup.com/insights/how-to-evaluate-potential-dst-properties-key-metrics-to-consider-and-questions-to-ask&t=How+to+Evaluate+Potential+DST+Properties%3A+Key+Metrics+to+Consider+and+Questions+to+Ask) [Share on LinkedIn](https://www.linkedin.com/shareArticle?mini=true&url=https://blog.wealthstonegroup.com/insights/how-to-evaluate-potential-dst-properties-key-metrics-to-consider-and-questions-to-ask&t=How+to+Evaluate+Potential+DST+Properties%3A+Key+Metrics+to+Consider+and+Questions+to+Ask) - Recent - Topics - Archive Recent Topics - [1031 Exchange (70)](https://blog.wealthstonegroup.com/insights/tag/1031-exchange) - [Delaware Statutory Trusts (DSTs) (43)](https://blog.wealthstonegroup.com/insights/tag/delaware-statutory-trusts-dsts) - [Tax Mitigation (37)](https://blog.wealthstonegroup.com/insights/tag/tax-mitigation) - [Wealth & Estate Planning (21)](https://blog.wealthstonegroup.com/insights/tag/wealth-estate-planning) - [721 Exchange / UPREIT (17)](https://blog.wealthstonegroup.com/insights/tag/721-exchange-upreit) - [Business Exit Planning (17)](https://blog.wealthstonegroup.com/insights/tag/business-exit-planning) - [REIT (10)](https://blog.wealthstonegroup.com/insights/tag/reit) - [Passive Real Estate Investing (7)](https://blog.wealthstonegroup.com/insights/tag/passive-real-estate-investing) - [Qualified Opportunity Zones (QOZs) (5)](https://blog.wealthstonegroup.com/insights/tag/qualified-opportunity-zones-qozs) See all Archive - [October 2026 (3)](https://blog.wealthstonegroup.com/insights/archive/2026/10) - [September 2026 (13)](https://blog.wealthstonegroup.com/insights/archive/2026/09) - [August 2026 (13)](https://blog.wealthstonegroup.com/insights/archive/2026/08) - [July 2026 (12)](https://blog.wealthstonegroup.com/insights/archive/2026/07) - [June 2026 (13)](https://blog.wealthstonegroup.com/insights/archive/2026/06) - [May 2026 (13)](https://blog.wealthstonegroup.com/insights/archive/2026/05) - [April 2026 (13)](https://blog.wealthstonegroup.com/insights/archive/2026/04) - [March 2026 (11)](https://blog.wealthstonegroup.com/insights/archive/2026/03) - [February 2026 (15)](https://blog.wealthstonegroup.com/insights/archive/2026/02) - [January 2026 (4)](https://blog.wealthstonegroup.com/insights/archive/2026/01) - [December 2025 (4)](https://blog.wealthstonegroup.com/insights/archive/2025/12) - [November 2025 (2)](https://blog.wealthstonegroup.com/insights/archive/2025/11) - [October 2025 (4)](https://blog.wealthstonegroup.com/insights/archive/2025/10) - [September 2025 (1)](https://blog.wealthstonegroup.com/insights/archive/2025/09) - [August 2025 (5)](https://blog.wealthstonegroup.com/insights/archive/2025/08) - [July 2025 (4)](https://blog.wealthstonegroup.com/insights/archive/2025/07) - [June 2025 (2)](https://blog.wealthstonegroup.com/insights/archive/2025/06) - [May 2025 (5)](https://blog.wealthstonegroup.com/insights/archive/2025/05) - [April 2025 (3)](https://blog.wealthstonegroup.com/insights/archive/2025/04) - [March 2025 (6)](https://blog.wealthstonegroup.com/insights/archive/2025/03) - [February 2025 (5)](https://blog.wealthstonegroup.com/insights/archive/2025/02) - [January 2025 (3)](https://blog.wealthstonegroup.com/insights/archive/2025/01) - [October 2024 (1)](https://blog.wealthstonegroup.com/insights/archive/2024/10) - [September 2024 (3)](https://blog.wealthstonegroup.com/insights/archive/2024/09) - [August 2024 (4)](https://blog.wealthstonegroup.com/insights/archive/2024/08) - [July 2024 (5)](https://blog.wealthstonegroup.com/insights/archive/2024/07) - [June 2024 (4)](https://blog.wealthstonegroup.com/insights/archive/2024/06) - [May 2024 (5)](https://blog.wealthstonegroup.com/insights/archive/2024/05) - [April 2024 (5)](https://blog.wealthstonegroup.com/insights/archive/2024/04) See all ### Subscribe by email ![Wealthstone-Logo-GoldWhite-2-1](https://blog.wealthstonegroup.com/hs-fs/hubfs/Wealthstone-Logo-GoldWhite-2-1.png?width=50&height=50&name=Wealthstone-Logo-GoldWhite-2-1.png) Wealthstone Group is a wealth management firm focused on providing investment and financial guidance for successful business owners, real estate investors and affluent individuals. 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