DSTS OFFER THE OPPORTUNITY TO OWN A FRACTIONAL INTEREST IN: TENS OR HUNDREDS OF MILLIONS OF DOLLARS OF REAL ESTATE.
Rather, DST owners need only to receive periodic electronic deposits (if applicable, not guaranteed), pay attention to quarterly property updates, and forward tax statements to their accountants (for use in filing a Schedule E). There are no voting requirements and no threats of capital calls. Institutional Operation Unlike most mom-and-pop landlords, large apartment operators employ sophisticated search- engine optimization tools for their rental websites, rely on regional or nationwide brand recognition for referrals, and use expensive software that calculates rental rates daily. For regular folks, getting “good” tenants (i.e.,
low turnover and delinquency) and setting the optimal rent is often a matter of luck. Similarly, large commercial operators often have on-site employees who engage tenants daily, and class-A apartment communities typically have ongoing resident retention programs designed to minimize turnover rates. It can be difficult, if not impossible, for individual landlords to compete with the resources of regional/national property management firms. Most individual landlords conducting a 1031 exchange own a single property in a single market with perhaps a single tenant, operated either by themselves or a small local property manager.
Conversely, DSTs offer the opportunity to own a fractional interest in:
• Tens or hundreds of millions of dollars of real estate.
• Assets that were sourced and now operated by an institutional real estate firm, often with a demonstrable track record in acquiring/operating/selling investment-grade real estate assets on behalf of REITs, pension plans, endowments, partnerships, TICs, and DSTs.
• Properties are managed by a regional or national property-management company with hundreds or even thousands of employees.
• Programs that have been subjected to multiple layers of due diligence, with an offering memorandum that includes a professional business plan and detailed financial projections.
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