DSTs – Are they safe investments?
Rate of return for a DST may be fixed:
On the other hand, DSTs may contain residential properties. DSTs containing solely or mostly residential properties might have a lower rate of return since there is less risk involved. There is less risk with residential properties because people will default on other liabilities before defaulting on their residence. Additionally, the rate of return on residential properties are lower because the rents collected from residential property will be lower than rents collected from commercial properties. The rate of return for less riskier properties may be around 5%.
Real properties held by DSTs are still still subject to the market:
DSTs are illiquid:
Due to the illiquidity of a DST, investors need to understand and be aware of the amount of time that would need to pass before they may be able to reuse or access their investment. As a result, if investors are looking for an investment vehicle that would allow them to pull out their money on demand, then a DST might not be the best option.
Ensure that the DST sponsor is a reputable one:
As such, because a sponsor influences a lot of the aspects of a DST from the very beginning, investors need to be sure that the sponsor for a DST that they may be interested in is a reputable one hopefully with a track record of other successful DSTs. Additionally, because the sponsor will be responsible for the day-to-day management of the DST, whether or not the sponsor is effective or not will be reflected in the actual returns and profits that investors will receive each month.
Moreover, investors need to know whether the DST’s sponsor is a credible and effective one in order to ensure that they are able to get the greatest return and profits from the DST. If the DST is not effective in the management of the property or properties, then it might be possible that there may be additional expenses incurred by the sponsor. As a result, the profit and return to each investor is reduced by the additional expenses.
DSTs provide investors with protection from individual liabilities:
In any event, investing in a DST removes the possibility of liability arising from the management or financing of the property. Instead, the financing and management of the property is handled by the DST’s sponsor. As a result, investors do not have to worry about personal or individual liability from tenants and creditors.
MAKE AN APPOINTMENT REQUEST
Select which days work best for you, and we will get back to you. Mandatory fields are marked with an asterisk (*).