Anyone have experience with Delaware Statutory Trust (DST)?

[Kevin Howard]

Hello BP,

Does anyone have experience with Delaware Statutory Trust which they'd like to share? Pros/Cons?

I have a multifamily property that I'm considering selling but would need to do a 1031 exchange. I'm nervous about being able to identify a replacement property within the 45 day period and certainly don't want to pay the taxes. A client of mine recommended a DST as a backup plan if I couldn't locate a property in time. I'd have roughly $1.3M that I'd need to invest...

I would love to find a NNN property to purchase or something similar that's fairly passive (that's why I was considering DST's).

Any input is greatly appreciated! 

[Dave Foster]

@Kevin Howard, You hit on the big number one reason - lack of control. For the investor looking toward a passive investing structure the DST is a very compelling option because of it's contined tax deferral through a 1031. And it's ability to let you take advantage of all of the components of the IRR to maximize your return.

But it comes with a cost - You buy it and forget it! the sponsor who is offering a good DST will have decades of experience and many completed DSTs (not the normal syndication experience of only a few years of history in a bull market). But you're still going absolutely passive. And a lot of folks just can't get over that control hurdle.

For you NNN properties will be your next best bet (although good returns are hard to find). There is a little more management involved. But not much. With NNN you're managing a 15 - 25 year lease. But like several have said, the DST is a great fall back position for your 1031. Most of them have a 2-5 year shelf life. But when they're sold you can again 1031 back out. Keep the compounding of deferred tax. And you can look to go back into bricks and mortar at that point if you like the market.