SAN FRANCISCO, Jan. 16, 2026 /PRNewswire/ — One of the questions I get on a regular basis is “Are DSTs the right investment for me?” Like most things in life, the answer is “it depends”. If you fit one or more of the criteria below it may be worth exploring DSTs in more detail.
- You’ve owned a rental property(s) for a long time that is highly appreciated, has a large capital gain, and you no longer want to manage real estate. You also don’t want to pay the taxes due if you sell the property.
- You are looking to transition to Passive Income instead of Actively Managed income. Having professionals manage all the details of the property without having to manage the manager.
- Diversifying your portfolio among different property types, geographies and sponsors is important to you. This spreads your risks, which is a key element of investing.
- You’re retired, or approaching retirement, and are looking to simplify your life while seeking the potential for predictable, stable income from the equity built up in your rental(s).
- If your real estate investment risk profile is looking for institutional real estate that most individual retail real estate owners aren’t able to buy on their own.
- Doing a 1031 exchange into a DST can help investors achieve the objectives outlined above.
Conversely, who should not invest in DSTs:
- You still want control over your real estate. With a DST you give up all control and let the professionals manage the property and business plan of the asset. If you still want a say in what happens DSTs are not for you.
- Investors looking for liquidity should not invest in DSTs, or any other type of real estate. Real estate as an asset class is not a liquid investment. You may see that DSTs do not have a secondary market in which to sell your DST which is not true. You can resell DSTs yourself or with the help of a broker. The issue is that they aren’t widely sold after investors purchase them so it’s a very thin secondary market. There are a couple of firms that specialize in selling investors DSTs if an investor needs the money. Be careful as most secondary market transactions occur at a discount to the original purchase price. Also, there may not be any buyers for your DST so you cannot rely on the secondary market as a way to sell your DST.
- With a DST, a sponsor went through the process of finding the property, doing all the due diligence, purchasing it, then putting it into a DST. They didn’t do that for free. If you do not like the idea of paying fees for someone to find your property, then a DST is not for you.
- You’re completely risk adverse. DSTs are still real estate, and any real estate is subject to market conditions. Real estate of all types is not considered a low-risk investment.
- You are not an accredited investor. DSTs are sold under securities laws which mean that you need to be an accredited investor in order to purchase DSTs.
In short, DSTs are for investors looking to get out of actively managing their properties and do a 1031 exchange into institutional grade properties that are managed by professionals. They are looking for passive income potential and a diversified portfolio. They understand that it is still real estate, which comes with the benefits and risk of real estate.
1031 Risk Disclosure:
There is no guarantee that any strategy will be successful or achieve investment objectives. Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments. Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. Potential for foreclosure – All financed real estate investments have potential for foreclosure. Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. The secondary market for these investments is very limited, and early exit sale is not guaranteed. Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions. Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits.
For more information on Emerson Equity, please visit FINRA’s BrokerCheck website.
General Disclosure
Not an offer to buy, nor a solicitation to sell securities. All investing involves risk of loss of some or all principal invested. Past performance is not indicative of future results. Speak to your finance and/or tax professional prior to investing. Any information provided is for informational purposes only.
Securities through Emerson Equity LLC Member: FINRA/SIPC. Only available in states where Emerson Equity LLC is registered. Emerson Equity LLC is not affiliated with any other entities identified in this communication.
Media Contact:
David Waal
Irvine Advisors
dwaal@rvineadvisorsllc.com
View original content to download multimedia:https://www.prnewswire.com/news-releases/david-waal-of-irvine-advisors-shares-insight-on-who-a-delaware-statutory-trust-dst-is-suitable-for-302663608.html
SOURCE Irvine Advisors
