Wiser Wealth: Should Real Estate Investors Also Consider Delaware Statutory Trusts (DSTs)?

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It is no secret that there is big money to be made in commercial real estate. Unfortunately, the financial barriers of getting involved will preclude most people from doing so. But that is partially why Delaware Statutory Trusts (DSTs) have been gaining more attention as a way to still be involved.

For those unfamiliar, an article from Forbes goes over the pros and cons of investing in DSTs.

In essence, when you invest in a DST you are entering into joint ownership of a property rather than owning the entire thing. An experienced sponsor first buys the property outright, then you and other investors start putting in your money for a certain amount of shares.

The property continues to take on investors until the amount initially paid is fully matched, at which point each investor now owns a portion.

It is important to bear in mind that even to invest in a DST you still need to be an accredited investor. In case you are unfamiliar with the term, the most common ways to be considered an accredited investor are to either have a salary exceeding $200,000 or to have an overall net worth higher than $1 million.

Fred Hubler, Chief Wealth Strategist for Phoenixville-based Creative Capital Wealth Management Group, a wealth management practice that services families in 28 states and specializes in retainer-based planning and alternative investment strategies, has used DST’s for years.

“We use them two different ways,” says Hubler. “First, for our clients who want to add real estate to their balance sheet but do not want the landlord headaches, DST’s allow direct ownership (partial) of intuitional quality real estate and tenants.”

For his clients who are selling real estate, Hubler uses DST to facility 1031 proceeds from a sale into a more diversified portfolio of several DSTs.  “It’s been a game-changer for our practice to help clients diversify out of the stock market and increase their exposure to hard assets that cashflow well,” says Hubler.

Even though DSTs are cheaper than owning the entire property yourself outright, they will still typically require a minimum investment on your part of $100,000.

Another perk beyond the lower price of getting involved is that DSTs allow you to accrue a more passive income. The investments are handled by real estate operators who will take care of things on behalf of you and your fellow investors. So in essence you are providing the money to move things along, while others focus on the moves necessary to bring in the returns.

Like every investment, a DST has both perks and shortcomings depending on what you are looking for. But if what you have read sounds appealing, this might be an option worth considering further.

To learn more about if DSTs are right for you, see what Forbes has to say in the article here.

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Want to know if you’re on the right path financially? CCWMG’S Second Opinion Service (SOS) is a no-obligation review with one of  Creative Capital Wealth Management Group‘s Wealth Strategists. 

It’s simply not possible to get a reliable second opinion from the same person who gave you the first one. Click here to schedule an SOS meeting with Fred and his team.

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