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Risks & Due Diligence · 6 min read

What Are the Risks of DST Investing?

An honest look at illiquidity, loss of control, leverage, and more.

Illiquidity

There is no public market for DST interests. Plan to hold for the full term, which is uncertain and controlled by the sponsor.

No control

Investors can't vote on property management, refinancing, or sale timing.

Real estate risk

Vacancies, falling rents, tenant bankruptcies, rising expenses, and market downturns can reduce income and value. Loss of principal is possible.

Leverage and fees

Many DSTs use debt, which magnifies results in both directions. Up-front and ongoing fees reduce the capital working for you.

Structural limits

Because of IRS requirements, a DST generally can't raise new money or substantially renegotiate leases or loans. In a distressed situation, the sponsor's options may be limited.

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Educational information only; not tax, legal, or investment advice. DSTs involve risk, including loss of principal, and are available only to accredited investors. Consult your own advisors.