Delaware Statutory Trusts (DSTs) have become a popular vehicle for investors seeking passive real estate exposure with tax deferral benefits through 1031 exchanges. But as with any investment, success starts with understanding what you’re getting into, and that means performing thorough due diligence.
While DSTs offer unique advantages, including access to institutional-grade properties and hands-off ownership, they are not without risks. Each offering has its own structure, property types, and investment terms. Due diligence helps you uncover not only the potential return but also the underlying risks.
When evaluating a DST investment, investors should carefully review the sponsor’s track record, the property’s performance potential, and the legal structure of the trust.
Due diligence goes beyond reading documents, it means asking the right questions. Examples include:
These questions help you uncover any red flags and ensure the offering aligns with your financial goals and risk tolerance.
DSTs are complex. Partnering with a financial advisor, CPA, or real estate attorney familiar with DST structures can provide clarity and peace of mind. Their insights can help validate assumptions, compare options, and ensure compliance with IRS rules for 1031 eligibility.
DSTs can be a smart solution for passive real estate investing and tax deferral, but only if the investment is aligned with your goals. With the right due diligence, investors can move forward with confidence—knowing the opportunity is well understood and thoroughly vetted.
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.
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