Pros and Cons of DST Investments: 6 Things to Consider

DST Investments

DST Investments have provided an opportunity for individuals to have titles on commercial properties. The idea of acquiring a share at half the price of what it used to cost or using the 1031 exchange in deferring tax gain, has made it possible for more professional investors to be interested in DST. 

According to successful investors, real estate investment has provided the background in acquiring and maintaining wealth. Investing in a DST property comes with specific rules and regulations that need to be followed with due diligence. A professional guide is necessary to fully understand the type of investment to put your money on. Just like other investments, DSTs too have their pros and cons.

Advantages of a DST Investments

1. Diversification

DST Investments allow individuals to diversify their risk as there is no limit on the number of DST investment assets an investor would want to have. What this means is that individuals can now access a market that was only deemed for wealth. According to Kay Properties, the minimum amount of investment on any of their DST properties for sale ranges between $25000 – $100000. With as little as $200000, investors can benefit from a DST by acquiring multiple assets in different locations under different sponsors.

2. Passive Investment

A DST allows individuals the possibility to a passive income stream. Issue of managerial responsibility in a DST is all provided by the sponsor. Having to deal with the land or property management becomes some else responsibility. Investors are only required to purchase their shares and have access to the income stream of their claims. Having such an investment allows individuals to have more time to spend with their families.

3. 1031 Exchange

Tax deferment is one advantage that pushes investors into investing with a DST. Imagine having an asset that has a gain tax over time. Upon the sale of such an asset, you pay almost 40% of what you get depending on the location of the asset. Who would like to ditch such an amount? That is where 1031 exchange comes in.

For an investor to differ from capital gain tax, DST Investments allow the sale of a DST asset to be replaced with a like-kind. According to the IRS ruling, all DST properties qualify for a 1031 exchange. What this means is that all DST investors can differ from paying capital gain tax indefinitely.

4. Access to high-profit Net Assets

DST allows individuals to access investment to high net institutional assets that are way out of individual financial reach. Try to imagine with just as low as $ 25000 of investment, individuals gains access to a title of assets that are worth millions of shilling. 

Properties under the management of DST sponsors include commercial properties, student apartments, private residential homes, office space, and even commercial storage. DST provides investors with the topmost security for all longtime investments.

Disadvantages of a DST

1. No Control of Asset Management

Investors interested in a DST should understand that the property responsibilities are all under the sponsor management. Investors who have long been working under asset control management understand how difficult it can be to invest in an asset and have no control over it. 

The operations and decision-making in all DST properties fall under the sponsor’s responsibilities. You can imagine all the asset’s financial issues, including loans and mortgage, are the sponsor’s responsibility. In case of a default, investors can lose their equity.

2. DST investments are Hard to Change to Cash

Most DST investors have sufficient assets that they might use to generate cash. Those with the idea of quickly generating money from DST investment should fully understand that DST takes almost 5 – 10 years to develop fully. 

If you consider investing with a DST, you should know that your equity investment would stay there until an entire cycle of the DST is complete and converting the equity into cash is not that easy. Investors are advised before investing in a DST, they should have a portion for investment into a DST and another to themselves.


Investing in DST is a great idea if you want to diversify your portfolio. However, It is advisable for any investors who are dealing with DST to seek help from a professional expert both of law and finance to help them fully understand the working of a DST deal.

Categorized as Business