If You’re Tired of Being a Landlord, This Might Be for You

Many investors reach a point where the constant responsibilities of property management no longer fit the life they want. If you’ve built wealth through real estate but now prefer predictable income without tenants, maintenance, or 1031 stress, a Delaware Statutory Trust (DST) may be the perfect next step.

What Is a Delaware Statutory Trust (DST)?

A DST is a legal trust that owns institutional-grade real estate — such as multifamily communities, industrial facilities, or medical offices.
Instead of purchasing a property yourself, you own a fractional interest in the trust.

Because the IRS recognizes DST interests as “like-kind property,” they qualify for a 1031 exchange.
This means you can:

• Sell your current investment property

• Defer capital gains and depreciation recapture

• Reinvest into a professionally managed, passive asset

You retain benefits like monthly income, appreciation potential, and tax advantages — with none of the hands-on landlord duties.

DST vs. Traditional 1031 Exchange

Traditional 1031 Exchange

• Must identify a new property within 45 days

• Must close within 180 days

• Must qualify for financing

• Must continue managing tenants, repairs, and expenses

DST

• You're investing into a trust that already owns stabilized real estate

• No financing or property search required

• 100% passive — all operations handled by a professional sponsor

DSTs are built for investors who value time, stability, and passive income more than operational control.

When a DST Makes Sense

A DST is often ideal for:

• Investors nearing or entering retirement

• Owners ready to step away from active management

• 1031 exchangers who don’t want another landlord role

• Investors seeking diversification across markets and asset types

• Families planning estate strategies that preserve a step-up in basis

How a DST Works

The trust owns the property, and a sponsor oversees:

• Leasing

• Maintenance

• Tenant relationships

• Financial operations

DSTs must follow strict IRS rules — known as the “seven deadly sins” — which prevent the trust from taking on new debt, renegotiating loans, or modifying leases. These rules ensure stability and 1031 compliance.

The Upside of a DST

• Passive income distributed monthly or quarterly

• Fully eligible for 1031 tax deferral

• Access to high-quality commercial properties

• Professional management and predictable operations

• Diversification across sectors and geographies

• Step-up in basis for heirs

The Trade-Offs

DSTs are not for every investor. Key considerations include:

• Illiquidity: Typically held 5–7 years

• Lack of control: Sponsor makes operational decisions

• Fees vary: Quality of sponsor and assets matters

• Due diligence is essential

Real-World Example

Typical DST cash-on-cash returns range from 4% to 9% annually, depending on the sponsor and asset quality.

A $1,000,000 investment might generate:

• $40,000–$90,000 per year

• Paid monthly or quarterly

• With no active management required

Upon sale at the end of the DST cycle, investors may also receive additional appreciation.

What Happens When Your DST Ends? Your 3 Exit Options

1. Complete Another 1031 Exchange

Roll proceeds into a new property or DST and continue deferring capital gains.

2. Cash Out

Pay taxes and take liquidity, ending your 1031 cycle.

3. Roll Into a REIT (721 Exchange)

Gain diversification, liquidity potential, and continued tax deferral until you sell REIT shares.

The Bottom Line

If you want freedom from property management but still value tax advantages, appreciation, and monthly income, a DST may be the perfect next step.

It’s a bridge between active real estate investing and true financial freedom.

If you’d like to explore how a DST fits into your next 1031 exchange or retirement plan, let’s connect.