Delaware Statutory Trust (DST)

[Dan Kerch]

Hey BP!

I will be conducting a 1031 exchange in the next 6 weeks or so but have been told about Delaware Statutory Trust. I have done some research but would like to hear personal experiences with them. Ideally I would like to have more than 45 days to make a decision on a property especially in today's market. From the sounds of it you have to have your investment in the DST for a particular amount of time. Any info would be helpful!! Thanks

[Jon Taylor]

@Dan Kerch,

A couple of things about DSTs to be aware of:

1. In response to, "I will be conducting a 1031 exchange in the next 6 weeks or so but have been told about Delaware Statutory Trust. I have done some research but would like to hear personal experiences with them." Check out this thread and perhaps reach out to individuals, individually. Or, post again and it will alert those of us who have participated previously. https://www.biggerpockets.com/...

2. In response to "Ideally I would like to have more than 45 days to make a decision on a property especially in today's market." DSTs can be tricky to fund in coordination with the 1031 window because the Sponsors are taking investor equity on a first-come-first-serve basis. It becomes VERY risky to ID (beyond 45 days) a DST, as the quality programs are in demand and are sold out quickly (within 30 days). There is no assurity that what you've ID'd will still be available if you delay the closing process.

3. In response to, "From the sounds of it you have to have your investment in the DST for a particular amount of time." Every DST has to document the exit intent in the memorandum. It seems that 5-7 years is common. The sale will be initiated by the Sponsor, and all beneficial interest owners of the Trust simultaneously have their liquidity event when the Sponsor chooses to sell. You are illiquid until that even occurs. So, it may not be the best tool to "time the market."

In my opinion, you should invest in a DST because it is your plan A, it meets your need, and it's a property (or portfolio of properties) that you are happy to own.