Frequently Asked Questions

What is a DST in Real Estate?

A Delaware Statutory Trust (DST) is a legal entity used for real estate investing, allowing multiple investors to pool funds to own fractional interests in large, income-producing properties. DSTs are commonly used in 1031 exchanges, enabling investors to defer capital gains taxes while gaining passive income from professionally managed properties without the responsibilities of direct ownership.

For a comprehensive overview, see our guide on what is a DST in real estate.

What is a 1031 Exchange?

A 1031 exchange lets real estate investors sell one property and buy another without paying taxes right away.

A 1031 exchange is a tax-deferral strategy under Section 1031 of the Internal Revenue Code, allowing real estate investors to sell an investment property and reinvest the proceeds into another "like-kind" property, deferring capital gains taxes. The term "like-kind" is broader than many people realize; it doesn't mean the properties have to be the same type. For example, an investor can sell a commercial building and exchange it for a multifamily property, vacant land, or even a Delaware Statutory Trust (DST). This strategy is widely used to grow real estate portfolios, preserve equity, and defer taxes on profits.

Learn more in our comprehensive guide: 1031 Exchange: A Full Guide.

How much can I make with a DST?

With a DST, you can typically expect to earn 4-5% in cash flow, which is paid out to you in monthly distributions. Over time, with property appreciation, your total returns can reach 10-12%. This combination of steady monthly income and long-term growth makes DSTs an attractive option for investors looking for passive income and potential appreciation without the hassle of managing the property themselves. Keep in mind, actual returns can vary depending on the market and the specific properties within the DST.

For a detailed analysis of DST returns and considerations, see our guide on Delaware Statutory Trust pros and cons.

How to Invest in a Delaware Statutory Trust?

Here's how to set up your investment in a Delaware Statutory Trust (DST):

Educate Yourself – Start by exploring all available resources to learn about DSTs and 1031 exchanges. Knowledge is key to making confident decisions about your investment strategy. You can read articles, watch videos, or talk with professionals to deepen your understanding.
Connect with a Qualified Intermediary (QI) – A QI is essential for guiding you through the 1031 exchange process. Reach out to a QI who will ensure that your property sale and reinvestment comply with IRS guidelines, helping you defer taxes effectively.
Execute the 1031 Exchange into the DST – Once you've sold your property and are ready to invest, the QI will facilitate transferring your equity into a DST. From there, you can start receiving monthly cash flow while your investment grows in value, helping you build long-term wealth.

This setup ensures you are informed, supported by experts, and positioned to make the most of your DST investment.

Learn more about the strategy: What is the Delaware Statutory Trust 1031 Strategy?

Does a Delaware Statutory Trust Require Accredited Investor Status?

Yes, to invest in a Delaware Statutory Trust (DST), you need to be an accredited investor.

In the United States, an accredited investor is a person or entity that meets specific financial criteria, allowing them to invest in certain higher-risk, less regulated securities. The U.S. Securities and Exchange Commission (SEC) defines the following requirements for an individual to be considered an accredited investor:

1. Income Test

The individual must have earned income exceeding $200,000 (or $300,000 with a spouse or spousal equivalent) in each of the last two years and expect to maintain the same level of income in the current year.

2. Net Worth Test

The individual must have a net worth exceeding $1 million, either individually or jointly with a spouse or spousal equivalent. This excludes the value of their primary residence.

3. Entities

Entities such as banks, insurance companies, partnerships, corporations, non-profits, and trusts may qualify if they have assets exceeding $5 million or if all equity owners are accredited investors.

Additionally, certain individuals with professional certifications or designations (e.g., Series 7, Series 65, Series 82) and knowledgeable employees of private funds may qualify, even if they do not meet the income or net worth thresholds.

For more information about DST requirements and considerations, see our guide on Delaware Statutory Trust pros and cons.

Additional Resources

For more detailed information, explore our comprehensive guides:

1031 Exchange: A Full Guide – Complete overview of 1031 exchanges
What is a DST in Real Estate? – Understanding Delaware Statutory Trusts
Delaware Statutory Trust Pros and Cons – Balanced analysis of DST investments
Problems with DSTs – Understanding potential challenges
The Seven Deadly Sins of DSTs – IRS restrictions explained
What is the Delaware Statutory Trust 1031 Strategy? – Strategy overview