Delaware Statutory Trusts (DSTs) are becoming a popular option for real estate investors looking for passive income, especially through a 1031 exchange. If you’re researching available DSTs, you’re likely interested in how they work, what makes one DST better than another, and whether they fit your financial goals. This blog breaks it all down in plain terms.
What Are DSTs?
A DST is a legal entity used to hold title to investment real estate. DSTs allow multiple investors to own a fractional interest in large properties—commercial buildings, multifamily housing, industrial spaces—without the headaches of active property management.
What Is a DST 1031 Exchange?
If you’ve ever searched for the keyword “DST 1031 explained,” you’re likely looking for a straightforward overview of how this investment tool works. A DST 1031 exchange combines a Delaware Statutory Trust with a 1031 exchange, which is a legal strategy that lets you defer capital gains taxes by reinvesting the proceeds from the sale of one investment property into another like-kind property.
In this structure, instead of directly purchasing a new property, you invest your proceeds into a DST, which then owns the replacement property. This allows you to enjoy passive income, portfolio diversification, and tax deferral without having to actively manage the real estate.
DSTs are pre-structured to meet IRS requirements, making them a convenient and compliant way for investors to complete a 1031 exchange. to meet IRS requirements, making them an accessible option for investors aiming to complete a compliant 1031 exchange efficiently.
Why Investors Look for Available DSTs
Not all DSTs are created equal. Smart investors look for ones with strong fundamentals: high occupancy, quality tenants, conservative debt structures, and experienced sponsors. The current market in 2025 has seen a shift toward more conservative, income-focused DST offerings as investors prioritize stability.
People often search for “available DSTs” because these investment opportunities tend to close quickly. Once all the equity in a DST is subscribed, it’s no longer open to new investors. That makes timing critical.
How to Find Quality Available DSTs
You won’t find DSTs listed on Zillow or Realtor.com. They’re typically available through financial advisors, broker-dealers, and DST platforms that specialize in 1031 exchanges.
Here’s what to look for:
- Track Record: Go with sponsors who have managed multiple DST offerings with a strong performance history.
- Property Type: Some investors prefer multifamily over retail or vice versa. Know your risk tolerance.
- Geography: Properties in growing markets tend to offer more appreciation potential.
- Exit Strategy: Understand when and how you’ll get your money back.
What Makes a DST 1031-Friendly?
A good DST 1031 property is pre-packaged for IRS compliance:
- It must be a like-kind property
- It can’t be actively managed by the investor
- It needs to be identified and closed within IRS timelines (45 days to identify, 180 days to close)
Available DSTs often come with these timelines baked in. That’s why working with a knowledgeable advisor is key—they help you hit the deadlines and avoid disqualification.
2025 Trends in Available DSTs
This year, we’re seeing DSTs focus on:
- Multifamily Housing: Steady demand and rent growth make this a go-to asset class.
- Industrial Real Estate: With the rise of e-commerce, warehouses and logistics centers are performing well.
- Medical Offices: Healthcare demand remains strong and consistent.
Some sectors, like traditional office space, are being approached with more caution. Always ask for the Private Placement Memorandum (PPM) to see the full picture.
Risks and Considerations
DSTs aren’t risk-free. Here are some common issues:
- Lack of Liquidity: You can’t just sell your interest whenever you want.
- No Control: You’re not the landlord; you’re a passive investor.
- Market Risk: Real estate values can drop, and tenants can default.
DSTs also usually have high minimum investments, often starting at $100,000.
How to Evaluate Available DSTs
When looking through available DSTs, consider:
- Occupancy Rates: Higher occupancy often means more stable income.
- Tenant Quality: National credit tenants are safer bets than local businesses.
- Loan Terms: Interest-only loans may offer higher cash flow but carry refinancing risk.
- Sponsor Fees: These can eat into returns. Read the PPM carefully.
DST 1031 Exchange: A Quick Example
Suppose you sell a rental property for $1 million. Instead of paying capital gains tax, you reinvest that money into a DST 1031 exchange. Your capital goes into three DSTs: a multifamily complex in Austin, a warehouse in Phoenix, and a medical office in Charlotte. Each DST sends you monthly income, and your tax bill is deferred.
That’s the power of using available DSTs in a DST 1031 structure.
Final Tips Before You Invest
- Work With a Specialist: General financial advisors may not know DSTs well. Seek out a 1031 specialist.
- Do Your Homework: Don’t rely on marketing brochures. Read the fine print.
- Be Realistic: DSTs are for income and tax deferral, not huge appreciation.
The Bottom Line
DSTs offer a unique way to invest in institutional-grade real estate without managing it yourself. If you’re in a 1031 exchange, knowing what available DSTs are out there can mean the difference between a rushed decision and a smart move.
Timing matters. So does who you work with. Do your research, stick to quality, and understand the risks.
