The Key Benefits of DST Investments

Wallace:
So the key benefits of somebody buying a DST as opposed to buying another property. I know a lot of folks will say, “Well, that’s my property. I know that property. Why would I want exchange for something I don’t know?” What do you see as the main reasons, the main benefits?

Brandon:
Well, we’ve already talked about tax deferral. We’ve already talked about regular income to investors. As I mentioned, a lot of investors are of retirement age, so DST programs can help with the income planning piece. Obviously, if an investor already owns real estate, hopefully they’ve already been doing … Been enjoying the benefit of income, but really the biggest benefit from that standpoint then is that a DST is a turnkey passive investment. So the sponsor, or perhaps a qualified third party, will manage the property. The investor doesn’t have to deal with tenants. They don’t have to worry about maintaining the property. Really their only responsibility in this whole thing is receiving hopefully a regular check from net income from the property. So in exchange for that, the sponsor will earn fees for syndicating, managing, and selling the property.

Wallace:
Okay.

Brandon:
I would also say that DST programs can provide an opportunity to own a share of the type of property that investors might not otherwise have access to. So many people who go into DSTs through a 1031 exchange, maybe they own rental duplexes or small retail properties, but since you’re pooling your capital alongside other investors, because the sponsor has acquisition and financing relationships, a DST program could allow you to own a piece of a much larger institutional type asset, like an Amazon distribution facility.

Wallace:
Sure. I remember seeing a advertisement at one point where it had the contrasting rundown, two plex or four plex with the sign on crooked and the grass grown up and it said, “Would you rather own this or that?” It showed it right next to a big, bright, shiny office building of some kind, and that’s true. I mean you get out of one, you get into the other and I think one of the things I hear a lot is the non-recourse loan, people being able to get that debt off of their personal balance sheet really appealing to them.