Types of DST Properties Available
What types of DST Properties are available?
What is the best DST investment for me? When looking at DST properties, what should an investor look for? DST market conditions are constantly changing. All types of DSTs are available to our advisors, including those listed below. Some are consistently available, while others are only available occasionally. It is possible to find DST properties in more than one category; for example, there could be net lease retail properties and zero coupon office properties.
A DST is usually leveraged, which means it has a mortgage on the property (or properties). Each investor would be assigned a portion of the debt in this case. Investing in tax-deferred exchanges requires debt replacement, which is an excellent option for those investors. The investor has no recourse to this financing since it is already in place. As collateral, the property (or properties) does not require qualification or guarantee from the investor.
The number of debt-free DSTs is also usually limited at any given time. As we guide you through your options, we aim to find a solution that works for you, no matter your needs—investing without accreditation. There is no need to worry, and investments and regions are available to non-accredited investors.
The following types of deals are available to you, and you can find out more about each of them.
Our advisors have access to all the latest DST offerings
About 50% of all DSTs are apartments, also known as multifamily properties. Their cash flow is usually lower than those of other property types, even though they are less risky.
Class A apartments are newly constructed, while class B apartments need some improvements, which adds value to the investment.
DSTs with triple-net leases are generally single-tenant buildings. These typically provide the most consistent cash flow and are desired in down markets, but they have limited growth potential. When looking for a high yield, you should consider these. There are national brands and credit-rated tenants such as Walgreens, CVS, AutoZone, Dollar Tree, Fresenius, and Tractor Supply.
DST has consistently included medical office buildings since over a decade ago. For more than ten years, DST has been tenants as tenants home to hospitals, doctors’ offices, and medical office buildings. The joint tenants are hospitals, doctors’ offices, plasma centers, and dialysis centers. Due to the improvements made in these types of buildings, medical offices generally see a lower tenant turnover rate.
The industrial property market is diverse in terms of sizes and shapes. Because they have large open spaces, many different tenants can use them. It is common for industrial properties to have few tenants and low turnover. During the past five years, internet shopping has increased the demand for industrial properties, which have become increasingly popular.
After a decline during the previous recession, DSTs in the hospitality industry is starting to recover. Business travelers are the focus of most hospitality DSTs. Since they are considered riskier than Net Lease and Apartment DSTs, they will cash flow at a higher rate. Since hotels only lease for one day at a time, declining or improving markets can be identified quickly.
During the past 15 years, office DSTs have changed dramatically. Today, most DSTs are single-tenant buildings; most are corporate headquarters or essential properties for tenants. As a result, the properties have lower cash flows but have given the properties more excellent stability.
Despite their higher risk, investors in assisted living DSTs benefit from several of the same advantages as they do from multifamily properties.
Due to the care needed in these facilities, rents generally range from $3000 to $5,000 a bed. The DST market also has lower-cost, lower-care senior living facilities and higher-cost, higher-care memory care facilities. With 10,000 baby boomers hitting 65 every year, long-term demand will increase.
Diversifying your portfolio with DSTs could be a great idea. The combination of apartments, medical offices, and net lease properties is not uncommon, and multiple tenants in the same or different states can exist.
There are several reasons why self-storage DSTs are desirable. Recession-proof properties have low to no release costs, so they perform well during recessions. Although there is a high demand for these types of DSTs, there is a limited supply. In the same way, apartments are in tall order, and low-risk properties are in high demand, resulting in higher prices and lower cash-on-cash returns.
Despite the rise of internet shopping, retail properties are still performing well. DSTs typically consist of one or more single-tenant buildings or large “power center” properties with anchors like Kohls, PetSmart, and Target, as well as a variety of smaller national and local retailers. The most sought-after tenants are those who are low-cost and recession-resistant.
The oil and gas industry allows 1031 exchanges for royalty programs. Compared to oil and gas drilling programs, these are very different. Oil and gas royalties depend on the amount of oil and gas collected in a defined area. Drillers are not at risk but are also not under their control.
Zero coupons DSTs aim to obtain as much debt in exchange as possible. In either case, there will be a and three of approximately 80% or slightly higher. The properties do not generate cash flow but will be repaid over time. A credit-rated company offers long-term leases used by exchangors and for other investments. Most exchangers will invest enough cash in zero-coupon deals to replace their exchange debt, followed by debt-free deals. A single exchange provides diversification, debt reduction, and cash flow.
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