Who Is the Ideal DST Investor in 2026?

We con­tin­ue with our series of edu­ca­tion­al posts for Jan­u­ary 2026 and one of the first ques­tions we get from investors may be “am I the right investor for a Delaware Statu­to­ry Trusts (DST)”. As a brief intro­duc­tion DSTs should not be a blan­ket rec­om­men­da­tion for all investors.

Jan­u­ary 22, 2026

By Al DiNi­co­la, AIF®
1031 Tax Deferred Exchange Spe­cial­ists & DST Advi­sor
NAMCOA® — Naples Asset Man­age­ment Com­pa­ny®, LLC
Secu­ri­ties offered through MSC-BD, LLC, Mem­ber of FINRA/SIPC

How­ev­er, for the right investor they could be a solu­tion to a cur­rent our future prob­lem they antic­i­pate, and it may just be trans­for­ma­tion­al.

So, the ques­tion may be how I know if I am an ide­al investor and do, I actu­al­ly fit the pro­file. For direct cash investors Delaware Statu­to­ry Trusts may be the only way that they could invest small sums of mon­ey and get the ben­e­fits of real estate invest­ment. We will focus on the ben­e­fits of exe­cut­ing a §1031 exchange uti­liz­ing a DST. How­ev­er, there are direct cash investors that will move into a DST for a num­ber of rea­sons. We have investors that are look­ing and search­ing for where to put small­er sums of mon­ey, maybe as small as $25,000. Even this amount placed into a DST may pro­vide the ben­e­fits of real estate invest­ment along with a poten­tial dis­tri­b­u­tion on a month­ly basis. Many of the DST require min­i­mum invest­ments of $100,000 for 1031 exchange par­tic­i­pants. How­ev­er, for direct cash investors that amount may be as lit­tle as $25,000. If the DST has any type of non-recourse debt, the investor would also be able to have tax favored returns from their invest­ment. We will cov­er direct cash invest­ment into DSTs in the future post.

So over­all who would the ide­al investor be and what would be their pro­file? We see real estate investors who have been land­lords for num­bers of years and now look at retir­ing from being a land­lord. They would move from active man­age­ment into pas­sive man­age­ment role. Many of these investors may be look­ing at exe­cut­ing a 1031 exchange to defer cap­i­tal gains until future peri­od of time. There’s anoth­er group of investors who are sell­ing a busi­ness and the busi­ness has a val­ue and many times the val­ue may be bifur­cat­ed in the good­will of the busi­ness as well as real estate that is owned. Investors in this posi­tion may elect to exe­cute a 1031 tax deferred exchange on the real estate owned. The busi­ness own­er through exit plan­ning may seek oth­er struc­tures with the pro­ceeds from the busi­ness sale. DSTs may also become a valu­able estate plan­ning tool that would focus on build­ing gen­er­a­tional or fam­i­ly wealth. There may be oth­er investors who are look­ing at sell­ing one large real estate invest­ment and diver­si­fy­ing into small­er sized DST’s that may pro­vide prod­uct mix or asset class mix as well as geo­graph­ic diver­si­fi­ca­tion. DSTs are for accred­it­ed investors only. This does not mean that all accred­it­ed investors are suit­able for DSTs. Advi­sors and rep­re­sen­ta­tives who deal on a dai­ly and week­ly basis with DSTs we’ll rec­og­nize this suit­abil­i­ty issue and only rec­om­mend DST’s that align with investor’s goals and objec­tives.

Who Should Avoid DSTs

There are a group of investors who should not con­sid­er DSTs. These would be investors who are short-term investors and who may need liq­uid­i­ty. As we have reviewed in oth­er posts, the spon­sor or oper­at­ing man­age­ment com­pa­nies con­trol the DST. This may become an issue if try­ing to nego­ti­ate and exit pri­or to the antic­i­pat­ed sale of the prop­er­ty which is con­trolled by the spon­sor.

There are many rea­sons why this could mat­ter in 2026.

There are pros and cons on whether or not we will expe­ri­ence mar­ket volatil­i­ty in 2020.  There is a degree of uncer­tain­ty with regards to inter­est rates and how that will affect the acqui­si­tion and dis­po­si­tion of real estate owned by indi­vid­ual investors as well as insti­tu­tion­al investors the demo­graph­ics of the cur­rent landlord’s view­point into the direc­tion of mov­ing from active man­age­ment to pas­sive man­age­ment. This may make DSTs increas­ing­ly rel­e­vant. In the past this may have been ref­er­enced as the baby boomer effect.

Con­clu­sion

So, there may be many dif­fer­ent types of investors who will seek out DST’s, per­form due dili­gence, engage in con­struc­tive con­ver­sa­tions with advis­ers and not move for­ward with the DST. How­ev­er, ful­ly under­stand­ing the ben­e­fits and draw­backs of the DST may help an investor deter­mine if they are the right can­di­date for a DST. Based on our expe­ri­ence, The ide­al DST investor val­ues income, tax effi­cien­cy, and sim­plic­i­ty over con­trol.

As always con­tact us for more infor­ma­tion and a com­pli­men­ta­ry con­sul­ta­tion.

NAMCOA® is a SEC reg­is­tered invest­ment advi­so­ry firm that pro­vides com­pre­hen­sive port­fo­lio man­age­ment, finan­cial plan­ning, and fidu­cia­ry deci­sion-mak­ing ser­vices on behalf of retire­ment plan spon­sors. Our Dif­fer­ence is sum­ma­rized by our fidu­cia­ry approach which enables us to bet­ter meet port­fo­lio and retire­ment plan objec­tives, result­ing in stronger risk adjust­ed returns for investors and peace of mind for Clients. We also focus on alter­na­tive real estate invest­ment. Many real estate investors are seek­ing tax deferred solu­tions uti­liz­ing §1031 exchanges or Oppor­tu­ni­ty Zones.

Alter­na­tive invest­ments and DSTs are not for all investors.  The acqui­si­tion of a cer­tain alter­na­tive invest­ments includ­ing DSTs is for accred­it­ed investors only.  Con­tact your invest­ment advis­er for addi­tion­al details on how a DST may be a solu­tion to your §1031 Exchange and suit­ed for your invest­ment future. For more infor­ma­tion on how to prop­er­ly set up an IRC §1031Tax Deferred Exchange or if you are an accred­it­ed investor and would like addi­tion­al infor­ma­tion on a DST con­tact Al DiNi­co­la at 239–691-8098 or email adinicola@namcoa.com.

This is not an offer to pur­chase or solic­i­ta­tion to pur­chase any secu­ri­ty, as such be made only through an offer­ing mem­o­ran­dum or prospec­tus.  Invest­ing in secu­ri­ties, real estate, or any invest­ment, whether pub­lic or pri­vate, involves risk, includ­ing but not lim­it­ed to the poten­tial of los­ing some or all your invest­ment dol­lars when you invest in secu­ri­ties. You should review any planned finan­cial trans­ac­tions that may have tax or legal impli­ca­tions with your per­son­al tax or legal advi­sor.   NAMCOA, LLC is a Reg­is­tered Invest­ment Advi­sor, reg­u­lat­ed by SEC (Secu­ri­ties and Exchange Com­mis­sion). Our com­pa­ny mail­ing address is 999 Van­der­bilt Beach Road, Suite 200, Naples Flori­da 34108. Secu­ri­ties Offered through MSC-BD, LLC, Mem­ber of FINRA/SIPC. 5 Cen­ter­pointe Dri­ve, Ste. 400 Lake Oswego, OR, 97035MSC-BD, LLC and NAMCOA are inde­pen­dent­ly owned and are not affil­i­at­ed.

Thank you.