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Highest Cash On Cash Return DST

Highest Cash On Cash Return DST Properties 

If you are a real estate investor, you are a long term holder of a conservative asset class. Many of our clients hold their real estate investments for 10,20,30+ years. When you decide you sell your real estate investment, if you do a 1031 exchange into another physical property, you are deferring your capital gains tax into another long term conservative investment asset class. You should treat a DST the same. Many clients who are selling their investment property do not want to be a landlord anymore and want to 1031 exchange into a DST. You should treat the Delaware Statutory Trust (DST) the same, as a long term conservative investment. Some clients are looking for the highest cash on cash returns that are out there. If you are trying to find the highest cash on cash returns, it could put your long term investment capital at risk! 

If you invested into your 401k or retirement account for 30+ years, would you invest your entire retirement into crypto currency, or highly volatile stocks? NO! Why would you want to sell your long term coderivative investment property, and put all your capital at risk by going into a volatile dst?

Here are some reasons why you shouldn't invest into high yield/high risk DST properties-

In 2008-2009 there were over 100 DST companies. Many of these DST companies were offering high cash on cash returns. When the real estate market crashed in 2008-2009 90% of the high risk dst companies filed bankruptcy and the dst investors lost all of their proceeds. 

Current dst distribution rates for conservative asset classes are between 3-5%. Any distribution rates over 6% are deemed high risk. 

High risk dst companies are investing in sub par class B or class C investment properties.

High yield dst properties have reducing cash on cash returns over a 10 year holding period to stabilize where realistic cash on cash returns should be. These can be found in the full PPM of a dst property. Many of these dst companies are promoting high cash on cash returns for year 1, then reducing them year over year. 

High quality dst companies that we partner with, have escalating cash on cash returns.  The top 10 dst companies have built in rental increases, and they pass these rental increases onto the the investors. 

When it comes to cash on cash returns of your long term conservative asset class, remember that the main goal is defer the capital gains tax in your 1031 exchange. The dst can provide the passive monthly income and potential appreciation when the property is sold. 

If you have any questions, or would like to schedule a consultation, please reply to this email or call our office directly at 805-583-2720. 

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