Delaware Statutory Trust

[Sophia Griffies]

I'm doing a 1031 exchange and considering investing in a Delaware Statutory Trust (DST) as my replacement property. I'd appreciate any feedback (pros and cons) from anyone with experience in purchasing a DST for a 1031 exchange. Thank you!

[Dave Foster]

@Sophia Griffies, Every deal and every sponsor is different. But it's actually surprising how similar costs can be for fractional DST ownership vs fixed asset ownership. The fees are different but can be very comparable when projected out. For instance you 'll have commissions when you sell real estate and loan costs when you buy real estate during a 1031. With a DST there may be acquisition fees and disposal fees. But assumption of the loan doesn't cost you anything. And assuming that debt also moves it from recourse in your name to non-recourse which can have a huge positive impact on your financial picture and security. Different name but possibly same impact. One consistent is that with a DST you will have management fees that ding your return. That's the price you pay for passivity.

We have a lot of clients making the transition. The key is to vet the lease the sponsor property and the company equally. to do that you want a DST sales person who is not just a securities broker. You want one who is a real estate professional with a securities license.