DSTs - How much time involved?

[Ann Seffens]

I am contemplating a 1031 into a DST. I have been watching videos & reading lots of posts, but one thing I haven't seen covered is how much time, after a DST is invested in, do you spend 'managing' the DST? Meaning, do you continue doing 'due diligence' analysis after you have the DST? And, how much due diligence analysis did you do prior to investing in the DST or did you just leave the analysis to your financial advisor &/or the DST sponsor?

[Jon Taylor]

Regarding timeframe, each offering is different, and needs to be understood in the context of the terms of the debt and investment objectives of the Trustee on exit.

That being said, generally DSTs can be acquired with hold periods in the 3-7 year range.

Regarding due diligence, every investor should be able to understand the answers to these questions prior to investing: (*note: you can get all of this information on your own, but it will require information derived from multiple data sources outside of the sponsor provided Private Placement Memorandum)

1. What is my all-in price compared to current market comps

2. What is the business plan to increase value through controllable factors?

2.a. What is the trailing 12 month rent per unit type and occupancy rate?

2.b. What is the rent per unity type and occupancy rate in the submarket

3. What will influence the intended exit strategy for investors?

After you’ve invested, you’ll receive quarterly or annual update letters from the sponsor, and you’ll work with the investor relations team within your wealth management advisors office to navigate and understand the challenges and opportunities faced over the hold term.

It’s a lot of work, but you shouldn’t be flying blind into any investment. Interview multiple advisor to determine who is best resourced to do the work of re-underwriting the deals that are attractive.