DSTs on the Rise
DST sales have been on the rise since 2012, when the structure began to be used widely. With sales on the rise, the DST industry is becoming a mature business, with broad-based DST pipelines of investment-grade properties available for investors seeking replacement property nationwide for their 1031 exchanges.
DSTs have a very low minimum investment amount, which encourages diversification to reduce risk. A diversified portfolio generally has less risk than a concentrated investment in a single asset.
Most exchangers need debt to fully qualify for tax deferral under Section 1031. While initially skeptical, lenders of all types, including agency lenders, have warmed up to the DST structure. This will help ensure a large volume of future DST investments with market-rate debt.
DSTs are sold as securities, with various protections afforded investors who purchase securities through FINRA-licensed broker-dealers and Registered Investment Advisors.