Chapter 12
Is a DST Right for You?
When Delaware Statutory Trusts Are (And Are Not) A Good Git.
Delaware Statutory Trusts (DSTs) can be an effective tool for many investors completing a 1031 exchange, but they are not the right solution for everyone. Understanding when DSTs align with an investor’s goals — and when they do not — is critical for making a sound decision.
When DSTs are Often a Good Fit
DSTs tend to work well for investors who:
- Want to significantly reduce or eliminate active management responsibilities
- Are looking to diversify their real estate holdings across multiple properties and asset classes
- Need to replace debt without personally guaranteeing new loans
- Value access to institutional-quality real estate
- Are focused on long-term tax deferral and estate planning benefits (such as step-up in basis)
- Have a time horizon of five years or longer and do not anticipate needing liquidity in the near term
- Prefer professional management over direct control
These characteristics are common among investors transitioning from active ownership into a more passive, income-focused phase of their financial life.
When DSTs are Often Not a Good Git
DSTs are generally less suitable for investors who:
- Want to maintain control over property decisions, leasing, or financing
- Need access to their capital within a relatively short period of time
- Are primarily focused on maximizing short-term returns or aggressive growth
- Prefer to actively manage real estate themselves
- Have a strong preference for properties in very specific locations or asset types that are not commonly available in DST format
- Are uncomfortable with giving up decision-making authority to a sponsor
The Importance of Aligning Structure with Objectives
The decision to use DSTs should be driven by the investor’s actual priorities rather than simply the desire to complete a 1031 exchange. An investor who values control and liquidity may be better served by purchasing direct replacement property (with professional management) or exploring other options. Conversely, an investor who is tired of landlord responsibilities and wants simplicity and diversification may find DSTs to be an excellent solution.
At 1031 DST Solution, presented by Corcapa 1031 Advisors,, we focus on helping investors clearly define their objectives first, then evaluate whether DSTs — or another replacement strategy — best supports those goals.
If you would like an honest assessment of whether DSTs are appropriate for your 1031 exchange, schedule a consultation or a brief call today by calling (949) 722-1031.
This content is educational and is not tax or legal advice. Please consult your CPA and attorney.
This content is educational and is not tax or legal advice. Please consult your CPA and attorney.
Request Current 1031 Exchange Property Listings
Browse replacement property offerings for your 1031 exchange.
Register
Prospective clients can register to receive current 1031 exchange property listings.
Browse Properties
Once approved, you can login anytime and view current 1031 DST investment properties.
1031 Advisor Guidance
Our qualified team will provide guidance and make recommendations based on your goals.