The Hard Truth About DST Investing

Most DST presentations focus on projected returns and promised benefits.

This guide focuses on what actually happens.

After 27+ years in 1031-qualified real estate, over $2 billion in transactions, and personal investment in 30+ DST and TIC properties, the conclusion is clear.

DSTs can be excellent investments.

They can also permanently destroy capital.

The difference between a strong DST investment and a poor one comes down to disciplined selection and execution. It depends on the integrity of the sponsor, the durability of the property type, the prudence of the leverage structure, the specific asset’s quality and fundamentals, the strength of the location and submarket, and whether the investment aligns with the broader market/economic cycle.

When these elements are carefully aligned, a DST can function as designed; when they are not, risk increases substantially.

IN A DST:

  • You cannot refinance.

  • You cannot force a sale.

  • You cannot replace management.

  • You cannot control exit timing.

  • There is no dependable secondary market.

All control belongs to the sponsor.

If the sponsor makes the wrong decision — or behaves unethically — investors absorb the consequences.

WHAT ACTUALLY WORKS

DSTs tend to perform best when:

  • Sponsored by disciplined, cycle-tested operators with long term track records of solid management and 100% transparent reporting/Communicating.

  • Focused on simple, durable asset classes (primarily multifamily and select industrial)

  • Purchased in the recovery or early expansion phase of the market cycle

  • Conservatively Leveraged with Longer Term (10 Year) Fixed Rate Financing

  • Sold into strong capital markets

When these factors align, outcomes can be exceptional.

When they do not, losses compound — and 1031 exchange rules can force investors into higher leverage on the next deal just to fully defer taxes.

The Hard Truth About DST Investing Guide Includes:

Six real, full-cycle case studies

Sponsor failure despite strong real estate

Best-in-class multifamily execution producing exceptional returns

Strong assets sold too early

Medical office capital impairment

Solid Multifamily sold near the market bottom

Assisted living: business risk disguised as real estate

This is not theory.

These are real outcomes.

THE BOTTOM LINE

DSTs are not inherently good or bad.

They are unforgiving real estate investments that require careful underwriting and disciplined selection.

With the right sponsors, the right properties, and the right timing, they can work extremely well.

Without those, the risk of permanent principal loss is real.

If you are considering a 1031 exchange into DST properties, request the full guide below.