Pros and cons of Delaware Statutory Trust Funds(DSTs) in a 1031 Exchange

A Delaware Statutory Fund, often referred to as a Delaware Statutory Trust (DST), is a legally recognized trust that allows investors to own fractional interests in real estate assets. These trusts are set up under Delaware law, which provides a flexible and favorable framework for such investment structures. DSTs can own various types of real estate, including multifamily properties, commercial buildings, and industrial facilities.

Here are some of the pros and cons of DSTs:


  1. Diversification: DSTs allow investors to diversify real estate holdings within a single investment, beneficial for those exchanging a single property for multiple properties.
  2. Cost Efficiency: By pooling resources, DSTs can offer cost savings compared to owning individual properties directly, including reduced management fees and shared expenses.
  3. Professional Management: DSTs are typically managed by experienced real estate professionals, providing access to institutional-grade asset management without direct property ownership burdens.
  4. Passive Investing: DST’s can be a good fit for investors who no longer wish to manage property directly, making these passive investments appealing.
  5. Low Minimum Investment: The barrier to entry for DSTs can be quite low, with minimum investments sometimes as little as $25,000. This accessibility allows more investors to participate in institutional-quality real estate.


  1. Complexity: DSTs are relatively new and complex, requiring higher due diligence. Investors should review offering documents and consult qualified professionals.
  2. Lack of Control: Investors surrender direct control over assets, which may not suit those preferring hands-on involvement.
  3. Liquidity Limitations: DSTs may have limited liquidity, with redemption periods and restrictions potentially impacting access to capital. Most DST’s are illiquid for a minimum of 6-8 years.
  4. Fees and Expenses: DSTs may incur various fees, including management and acquisition fees, which can vary significantly between offerings.
  5. Marketing Caution: Given the trend of marketing DSTs to retirees, we urge investors to ensure specific offerings align with long-term goals and risk tolerance.

The suitability of DSFs for 1031 Exchanges depends on individual investment objectives and financial situations. We recommend consulting with qualified professionals to evaluate benefits and risks thoroughly.

About SIFF

For over 20 years SIFF – Strategic Wealth Advisors Specializing in Real Estate Investments – has provided unbiased, fee-based real estate consulting to disrupt outdated real estate models. We are not realtors or agents. Our role is to educate and empower clients by objectively outlining all options. Our fee-only structure allows us to put client interests first. By taking an unbiased, consultative approach, SIFF aims to help clients prosper through wise real estate investments.

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