DST Risks, Fees & Downsides

Before you invest

The four risks that matter

Every Delaware Statutory Trust carries the same four categories of risk. This page is the summary. The full treatment, including an itemized fee table and the structural constraints Revenue Ruling 2004-86 imposes on the trust, sits on the main Delaware Statutory Trusts page.

• Illiquidity. DSTs are long-term holds, typically until the sponsor sells the underlying property, often 5 to 10 years. There is no public secondary market, and selling early, if it is possible at all, may mean a steep discount. Only commit capital you will not need during the hold.
• No control. Investors are completely passive. You cannot influence management, leasing, refinancing, or the timing of a sale. The sponsor decides when the property sells, and that decision may not line up with your plans.
• Fees and load. Acquisition, selling, asset-management, property-management and disposition fees all come off the top and reduce the capital that actually goes into real estate. Always read the Private Placement Memorandum and ask for a full fee breakdown in writing.
• Real-estate and market risk. Vacancies, falling rents, rising interest rates, oversupply, or a downturn can reduce income or principal, and leverage amplifies losses as well as gains. DSTs are not guaranteed and you can lose money, including your entire investment.

See the full risk, fee and structural analysis →

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