Timely and Current Market News on the DST Landscape in the United States
DSTs for Capital Appreciation
Some DSTs are structured for Capital Appreciation, most invest in commercial real estate, some in opportunity zones, others even in energy. Have you reviewed the financial objectives of a particular DST ? Do they match your objectives?
DSTs for Income
A majority of 1031 investors seek DSTs for current income and passive management. Have you vetted the experience of the DST Sponsor? Any regulatory history or bankruptcies you would like to know about?
DSTs for Diversification
Besides the obvious benefits of negative correlation affects of real estate on other asset classes, are you diversifying your 1031 into other property types, sponsors and geographical locations?
What is Your 1031 Strategy
- What is the background of your QI ?
- Are you paying a commission or a fee?
- Do you truly know the DST landscape of all available solutions, or is a broker pushing their “own deal” ?
- Any complaints or bankruptcy history?
Prudent Man Rule
“to observe how men of prudence, discretion and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested.”
Source: Harvard College v Amory (1830) 26 Mass (9 Pick) 446 is a US trusts law case, which repeated the famous formulation of the “prudent person rule“, that people in charge of other people’s money must exercise due care and skill, and look after the money as if it were their own.
To Protect Your DST 1031 Investments
Do you Know the background of your advisor or broker. Any conflicts of interest?
Should you be paying a commission or a fee? Is the DST investment being promoted, “Proprietary””?
To best find success, attempt to find a fiduciary that can represent your interests first, even if it means sacrificing commission revenuer on their part. This transaction should be all about you and your objectives .