Welcome to the first episode of a eight part series where we dive into the world of Delaware Statutory Trusts (DSTs). Brandon Bruckman and Joshua Wright are your hosts, ready to unravel the complexities and advantages of this investment option.
As they begin their discussion, they clarify that the DST is not a REIT (Real Estate Investment Trust). Unlike a REIT, a DST allows investors to own physical real estate, making it eligible for 1031 exchange transactions. They emphasize the importance of understanding the distinction between the two.
The hosts break down the definition of a DST, highlighting its two-tier structure. The real estate sponsor handles property acquisition, management, and financing, while investors contribute capital and enjoy a passive role. They simplify the concept, explaining that a DST is essentially a syndicated structure focused on real estate.
They also touch on the history of DSTs, which emerged as a result of the 2004 revenue bulletin that recognized them as viable entities for 1031 exchanges. Prior to DSTs, tenant-in-common (TIC) structures were prevalent but came with complications. TIC agreements required unanimous consensus, which often posed challenges when making decisions. Furthermore, TICs carried the risk of recourse debt and complicated closing procedures.
In conclusion, Brandon and Joshua highlight the benefits of DSTs, including their suitability for 1031 exchanges and the direct ownership of real estate. They stress the importance of understanding the structure and purpose of DSTs and aim to simplify the concept throughout the podcast series.
Join them in future episodes as they explore the various aspects of DSTs, including advantages, disadvantages, underwriting, sponsors, and more. It's an informative and engaging journey into the world of retiring real estate investors.
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