DST Fees and Returns: Load, Ongoing Costs and What You Earn

Key takeaways

• DST fees come in three waves: an upfront load when the offering is raised, ongoing fees while the trust owns the property, and exit fees when it sells. All three come out of investor money.
• The distribution rate is the yearly cash paid to you divided by what you invested. It is a cash-flow number, not a return number. Two DSTs with the same distribution rate can end with very different results.
• Total return adds what you get back at the sale to the distributions you received. In my hypothetical 10-year example, the same 4.4% distribution rate produced annual returns from about 2.1% to about 4.9%, depending only on the sale price.
• Because the load comes off the top, a property often has to rise in value just to give investors back their original equity. In my all-cash example, that break-even rise is about 15%.
• In my offering records as of October 2026, the median projected year-1 distribution rate was 4.7%, across 71 offerings that published one. Projections are not guaranteed, and actual results can differ a lot.
• This guide is education, not tax or investment advice. Confirm every number with the offering's private placement memorandum, your CPA, your attorney and your qualified intermediary.

What are DST fees, in plain English?

A Delaware Statutory Trust, or DST, is a trust that owns real estate. Many investors each buy a slice of it, called a beneficial interest. A real estate company called the sponsor finds the property, arranges any loan, raises the money and runs the trust. If you are new to the structure, start with my complete guide to Delaware Statutory Trusts, then come back here.

DST fees are what it costs to put that structure together and run it. You don't write a separate check for them. They come out of the money investors put in and out of the property's income. That is why they are easy to miss.

I sort DST fees by when they are paid:

1. Upfront. Paid when the offering raises money and buys the property. Together these are often called the "load."
2. Ongoing. Paid each year while the trust owns the property.
3. At the exit. Paid when the property sells.

Each wave hits your return in a different way. The upfront load shrinks the amount of your money that buys real estate. Ongoing fees shrink the cash left for distributions. Exit fees shrink what comes back to you at the sale.

A few terms I'll use

• Equity is the cash investors put in. In a 1031 exchange, it's the money your qualified intermediary sends to the trust.
• Private placement memorandum (PPM) is the offering document. It describes the property, the loan, every fee, the conflicts of interest and the risks.
• Net operating income (NOI) is the property's rent minus its operating expenses, before any loan payments.
• Distribution is cash the trust pays out to investors, usually monthly.
• Hold period is how long the trust owns the property before it sells.

What is the load on a DST?

The load is the share of investor equity that goes to costs on day one instead of into real estate. It is the biggest fee most DST investors will ever pay, and it happens before the property earns a dollar for you.

I already wrote a line-by-line walk through the PPM's "Estimated Use of Proceeds" table in my guide to 1031 exchange costs and fees. That guide shows how to add up each line and why the denominator matters. I won't repeat it here. Instead, this section focuses on what the load means for your return.

What goes into the load

Most loads include some mix of these:

Reserves are different from the rest. They stay in the trust as cash, and any unused part usually comes back to investors at the end. But they are still equity that isn't buying property on day one.

How big is a typical load?

I won't quote a typical DST load. It varies too much from offering to offering, and the only number that matters is the one in the PPM you are reading.

The SEC's investor education site notes that for non-traded REITs, "Sales commissions and upfront offering fees usually total approximately 9 to 10 percent of the investment," according to Investor.gov. That figure is for non-traded REITs, a different product. It isn't a DST figure, and it isn't a benchmark for any offering I make available. The only load that matters is the one in the PPM in front of you.

What the load does to your money

Here is the plain arithmetic. Say a hypothetical all-cash DST spends 10% of equity on fees and costs and keeps 2% as reserves.

• You invest $500,000.
• $50,000 goes to fees and costs.
• $10,000 sits in reserve.
• $440,000 buys your share of the real estate.

On day one, your share of the trust is worth about $450,000 if the property is worth exactly what the trust paid. That's $440,000 of property plus $10,000 of reserves. Your interest was bought for $500,000.

So the property has to rise in value just to get you back to even. That isn't a flaw in any one offering. It's how the structure works. The question is whether what you get for the load is worth it to you.

Why the load is worse with debt

When a DST uses a loan, fees based on the total purchase price grow as a share of your equity. A 2% acquisition fee on a property that is half debt costs about 4% of investor equity.

My guide to DST debt and leverage goes deeper on how loans change both risk and returns. For fees, the lesson is short. Always ask what a fee percentage is a percentage of.

What ongoing fees does a DST charge?

Ongoing fees come out of the property's income every year before any cash reaches you. They are smaller than the load in any one year. Over a 10-year hold, though, they can add up to more.

Asset management fee

The sponsor charges this for overseeing the trust. That covers reporting, lender relations, budgets and investor communications. It can be based on several different things:

• A percentage of the property's gross revenue
• A percentage of investor equity
• A percentage of the property's value or purchase price
• A flat yearly amount

The base matters as much as the rate. A fee on gross revenue rises when rents rise, even if expenses rise faster. A fee on purchase price stays the same even if the property struggles.

Some PPMs say the asset management fee is "subordinated." That usually means it is paid only after investors receive a set level of distributions. Others say it can be deferred and paid later. Read the exact words, because they decide who absorbs a bad year first.

Property management fee

Someone has to run the building, collect rent, handle repairs and lease space. That property manager is often a sponsor affiliate, though sometimes it's a third party. The fee is usually a percentage of collected rent.

This fee is not unique to DSTs. If you owned a rental directly and hired a manager, you would pay one too. Many direct owners pay it in their own time instead.

Trust and administrative costs

These include the Delaware trustee, annual tax reporting, audits or reviews, investor reporting and software. They are usually small in dollars. On a small trust, though, they can still be a noticeable share of income.

The master lease spread

Many DSTs with many tenants, like apartments or self-storage, use a master lease. The trust leases the whole property to a sponsor affiliate called the master tenant. The master tenant then runs the property and pays the trust rent.

The master tenant keeps whatever the property earns above the rent it pays the trust and its operating costs. That spread isn't labeled a fee, but it is money that doesn't reach investors. Some master leases also pay the trust "additional rent" when revenue beats a set level. The master lease section of the PPM explains how the split works.

A hypothetical example of how the base changes the fee

Here is a made-up offering with round numbers. It doesn't represent any real offering.

• Investor equity: $20,000,000
• Total capitalization: $36,000,000 (with a $16,000,000 loan)
• Gross revenue: $3,000,000 a year

The same "0.5%" label produces a fee nearly twice as large when it is based on total capitalization instead of equity. When you compare offerings, convert every ongoing fee into dollars, then into a percentage of equity.

What fees are charged when a DST sells?

The exit is where the last fees come out. They are easy to overlook, because they happen years after you read the PPM.

Disposition fee

Many DSTs pay the sponsor a disposition fee when the property sells. It is often a percentage of the gross sale price. Like the acquisition fee, it is based on the property's value, not your equity. With debt, that makes it bigger as a share of your money.

Sale costs paid to third parties also come out at this point. These include the broker who sells the property, title, escrow and any transfer taxes. Every seller of real estate pays these, so they aren't unique to DSTs.

Promote, or back-end profit share

A promote is the sponsor's share of the profit above a set return to investors. The return investors must get first is called the hurdle. Sponsors sometimes call the promote a "carried interest" or "incentive fee."

A promote can align the sponsor with you, because it only pays when investors do well. How well it aligns depends on the hurdle. Here's a hypothetical comparison with round numbers. It represents no real offering.

Say a trust raised $10,000,000. It paid investors 4.4% a year in distributions for 10 years, a total of $4,400,000. At the sale, after the loan, sale costs and disposition fee, $13,000,000 of cash is left to split. The promote is 20% of the profit above the hurdle.

In the second row, investors were owed 6% a year, or $6,000,000 over 10 years. They had already received $4,400,000 in distributions. So they get the $1,600,000 shortfall, plus their $10,000,000, before the split starts.

Same sale, same property and same promote rate, yet a $320,000 difference to investors. The words in the hurdle matter. My guide to evaluating DST sponsors covers how to judge whether a sponsor's pay lines up with yours.

How are DST returns measured?

People use several numbers to describe DST returns, and they mean very different things. Here are the ones you'll see, in plain English.

Distribution rate (or distribution yield)

The distribution rate is the yearly cash paid to you divided by the equity you invested. If you invest $500,000 and receive $22,000 in a year, your distribution rate is 4.4%. You can turn a projected rate into monthly dollars with my DST income calculator. It shows cash flow only, not your total return.

Sponsors usually show a projected distribution rate for each year of the hold. A projection is the sponsor's estimate. It isn't a promise. FINRA, the brokerage industry's regulator, told firms selling similar real estate programs that they "should determine whether any projected yields can reasonably be supported by the property operations," in Notice to Members 05-18.

People also call this the "DST yield." It answers one question: how much cash might this pay me while I hold it? It says nothing about whether you'll get your money back.

Cash-on-cash return

Cash-on-cash return is the same idea, usually used by direct property owners. It is yearly cash flow divided by the cash you put in. For a DST, it is the same as the distribution rate.

Cap rate

A cap rate, or capitalization rate, is the property's NOI divided by its price. It describes the property, not your slice. The cap rate ignores the loan, the load and the trust's ongoing fees. A DST's distribution rate can be above or below the cap rate, depending on the debt and the fees.

Total return

Total return is everything you get back, minus what you put in. It adds all the distributions to what you receive at the sale. If you invest $500,000, receive $220,000 in distributions, and get $530,000 back at the sale, your total profit is $250,000.

Equity multiple

The equity multiple is total cash back divided by cash in. In the example above, $750,000 back on $500,000 in is a 1.5x multiple. It's simple and easy to compare. It ignores time, though. A 1.5x in 5 years is far better than a 1.5x in 15 years.

Internal rate of return (IRR)

The IRR is the yearly return that accounts for when each dollar arrives. It treats money received sooner as worth more than money received later. It is the closest thing to an annual return on a whole investment. It is also the hardest to calculate by hand, and it depends heavily on the assumed sale price.

Return of capital

Some of a distribution can be a return of your own money rather than profit. That can happen when the trust pays distributions from reserves or other sources, not just property income. Investor.gov notes that non-traded REITs often pay distributions in excess of their funds from operations, and that "they may use offering proceeds and borrowings" to do it. The same idea can apply to any real estate security. A high distribution funded partly by your own capital isn't income in the economic sense.

The metrics side by side

What is the difference between distribution yield and total return?

This is the most important idea in this guide, so I'll make it concrete.

A distribution rate tells you what you might receive while you hold. Total return tells you what you actually earned once the property sells. The gap between them is the sale price, the load and every exit fee.

A DST could pay a steady 5% a year and still lose money if the property sells for much less than it cost. Another could pay 4% and earn more in the end because the property sold for a gain. You can't see either outcome from the distribution rate alone.

Why the gap exists

Three forces pull total return away from the distribution rate:

1. The load. Your equity bought less real estate than you invested. Unless the property rises, you get back less than you put in.
2. The sale price. Property values rise and fall with rents, interest rates and the market. The sponsor chooses when to sell, within the market it faces.
3. Exit fees and sale costs. These come off the sale proceeds before they reach you.

What this means for your expectations

If you want income, the distribution rate matters. But don't treat it as your return. The honest way to think about a DST is as two pieces: cash flow during the hold, and a sale at the end that can be higher or lower than you hope. Your total return depends on both.

Cash flow vs. appreciation: what drives DST returns?

DST returns come from two sources. Cash flow is the distributions you receive while the trust owns the property. Appreciation is the rise or fall in the property's value by the time it sells.

Where cash flow comes from

Cash flow comes from rent. Before rent reaches you, the trust pays operating costs, loan payments, ongoing fees and any money added to reserves. What's left can be distributed.

Cash flow can change. A tenant can leave. Insurance and property taxes can jump. A lender can trap cash in reserve if the property falls below a coverage test. Distributions are not guaranteed, and they can be reduced or stopped.

Where appreciation comes from

Appreciation comes from rising income, falling cap rates, or both. If the property's NOI grows each year, buyers will generally pay more for it. If interest rates rise and buyers demand higher cap rates, the price can fall even when income grows.

Appreciation is the part you have the least control over, and the least visibility into. It is also the part that decides whether you recover the load.

How leverage changes the mix

An all-cash DST relies on property income for distributions and on property value for the sale. A leveraged DST adds a loan. Debt magnifies both directions. A small rise in property value becomes a bigger rise in equity. A small drop becomes a bigger loss, and a large drop can wipe out equity entirely.

Interest-only loans can also raise early distributions, because no principal is being repaid. That can make a leveraged DST's distribution rate look higher than an all-cash one, without making it a better investment.

How property type changes the mix

Different property types lean toward different mixes. These are general patterns, not rules:

I cover these differences in depth in my guide to DST property types.

A worked example: following $500,000 through a hypothetical DST

This example uses made-up round numbers. It doesn't represent any offering, sponsor or client. The fee levels are made up for illustration and aren't typical of any offering I make available. It isn't tax or investment advice, and it ignores taxes, which I cover later.

The setup

You invest $500,000 in a hypothetical all-cash DST with a 10-year hold.

The cash flow

The trust bought the property at a 5.5% cap rate. So your $440,000 share earns NOI of $440,000 × 5.5% = $24,200 a year.

Ongoing trust costs, such as asset management and administration, take $2,200 a year from your share. That leaves $22,000 to distribute. That is a 4.4% distribution rate on your $500,000.

Notice the property earns 5.5%, but you receive 4.4%. The gap is the load and the ongoing fees. To keep the example simple, I assume distributions stay at $22,000 every year. Over 10 years, you receive $220,000.

The sale

Now I'll run three hypothetical sale outcomes. Each one assumes 2% third-party sale costs and a 1% disposition fee, both based on the sale price, plus the $10,000 of reserves returned.

What the example shows

All three scenarios had the same 4.4% distribution rate every year. The annual return ranged from about 2.1% to about 4.9%. The only difference was the sale price.

In Scenario B, the property held its value for 10 years. You still got back $63,200 less than you invested at the sale. The distributions covered that, but your annual return was well under the 4.4% distribution rate.

In Scenario C, distributions hid a loss of principal. You received $592,780 in total, but only $372,780 of your $500,000 came back at the end. With debt, the same price drop would have cut much deeper.

The break-even rise

How much does the property have to rise just to return your $500,000 at the sale? With 3% total exit costs and $10,000 of reserves, your share of the sale price has to reach about $505,155. That is about 15% above the $440,000 the trust paid for your share.

At 2% a year, that takes roughly seven years. If values are flat, it never happens. That is the real cost of the load, and it's a reason to think about the full hold, not just year one.

What the fees cost in total

For contrast, imagine the same property with no load, no trust fees and no disposition fee. All $500,000 would buy real estate, you'd receive 5.5% a year, and you'd pay only the 2% third-party sale costs. In Scenario A, you'd get back about $872,307 in total, for an IRR near 6.9%.

That isn't a realistic option. A direct owner pays for management in time or money, can't easily buy a property this size, and takes on all the work. But it isolates the fees. In this hypothetical, the load, ongoing fees and disposition fee together cost about $122,000 over 10 years, or roughly two percentage points of IRR a year.

What you get in return is no landlord duties, institutional property, a structure that can work in a 1031 exchange, and the potential to defer tax if the exchange meets the rules. Whether that's worth the cost depends on your situation. You should see the number either way.

How do small ongoing fees add up over a long hold?

Ongoing fees feel small because they are quoted as fractions of a percent. Over a long hold, they compound into real money.

The SEC's investor education office makes this point with a simple example. In its bulletin on how fees and expenses affect your investment portfolio, it starts with $100,000 earning 4% a year for 20 years. With a 0.25% yearly fee, the portfolio grows to about $208,000. With a 1% fee, it grows to about $179,000. The bulletin's summary is direct: "Over time, even small ongoing fees have a big impact on your investment portfolio."

That example is about a portfolio, not a DST. But the math works the same way on any fee that takes a slice every year. In my DST example, the $2,200 of ongoing costs is less than half a percent of equity a year. Over 10 years, it's $22,000 that never reached you.

Here's the practical takeaway. Convert every ongoing fee into dollars per year on your investment. Multiply by the projected hold. Then compare that total across offerings.

What is a tax-adjusted DST yield?

A tax-adjusted yield estimates what a DST distribution is worth after income tax. The tax-equivalent yield turns that back into a pretax rate for comparison. It matters because part of a DST distribution can be taxed less in the early years than the same cash from a bond or a savings account.

Why DST cash can be taxed less now

A properly structured DST is a grantor trust under IRS Revenue Ruling 2004-86. That means you report your share of the property's income and expenses as if you owned a slice directly. Your share of depreciation comes with it.

Depreciation is a yearly tax deduction for the wear on a building. IRS Publication 527 explains that "You recover the cost of income-producing property through yearly tax deductions." The same publication shows residential rental property depreciated "over 27.5 years" under the general system.

Depreciation reduces your taxable income without reducing your cash. So part of a distribution may be sheltered from tax in the year you receive it. I explain how DST depreciation is reported, and how a 1031 exchange changes it, in my guide to DST tax reporting.

A hypothetical example

This uses made-up numbers, including a made-up tax rate. Your CPA should run your real figures.

Say your $500,000 DST pays $22,000 in a year. Your share of depreciation is $12,000, so your taxable income from the trust is $10,000. Assume a combined marginal rate of 40% on that income.

The last row is the tax-equivalent yield. It's the after-tax yield divided by one minus the tax rate: 3.6% ÷ (1 − 0.40) = 6.0%. In this hypothetical, a fully taxable investment would need to pay 6.0% to leave you with the same cash after tax.

The catch: deferral isn't elimination

Depreciation lowers your basis, which is your tax cost in the property. A lower basis means a bigger gain when the property eventually sells in a taxable sale. The IRS says the depreciation-related part, called unrecaptured section 1250 gain, "is taxed at a maximum 25% rate" (IRS Topic 409).

The 3.8% net investment income tax can also apply. Under 26 U.S.C. §1411, it can apply when your modified adjusted gross income is above $250,000 for joint filers, $125,000 if married filing separately, or $200,000 for most other individuals. The tax is 3.8% of the smaller of your net investment income or the amount your income is over that threshold.

If you keep doing 1031 exchanges, the tax can stay deferred. Under current law, heirs may receive a stepped-up basis at death. But laws can change. A tax-adjusted yield is a useful comparison tool, not a promise about your taxes.

Several things also limit the benefit. If your exchange carried over a low basis from your old property, you may have less depreciation than a cash buyer. Passive loss rules can limit how losses are used. State taxes vary. All of this is why your CPA should run it with your real return.

Why do projected DST yields differ so much?

In my records, projected year-1 distribution rates ranged from 4.0% to 9.0%. A higher number isn't automatically a better deal. Here are some things that can drive the difference.

Leverage and loan terms

A loan with a low fixed rate, especially an interest-only loan, can push early distributions up. It also adds risk. When the loan matures, the trust may face a higher rate or a forced sale. Some loans let the lender trap cash if the property's income falls.

Property type and lease structure

A long net lease to one tenant often has a fixed rent schedule. Its projected rate may look steady and higher. But everything rides on that tenant, and on what happens when the lease ends.

How the sponsor priced the deal

A higher cap rate at purchase can mean a cheaper price, a riskier property or a weaker market. The load, reserves and fees also shape the projection. A thin reserve makes the projected rate look higher today, and the risk higher later.

Where the cash comes from

Some projections assume rent growth that hasn't happened yet. Some are partly funded by reserves in the early years. Ask the sponsor what share of each year's projected distribution comes from property operations.

Energy royalty programs

Some net lease offerings on my platform are energy royalty programs. They own a share of production revenue from oil and gas wells run by third-party operators. Royalty income can be higher or lower than property income, and it rises and falls with energy prices and production. They carry a different kind of risk.

When a projected rate stands out, ask one question first: why is it high? The answer can tell you more than the rate does.

How do DST fees compare with a rental or a REIT?

Here is a general comparison of where the fees show up. Every offering and property is different, so treat this as a map, not a quote.

A DST usually costs more than owning a rental directly. In exchange, you get no landlord duties, access to larger properties, and a structure that can qualify as replacement property in a 1031 exchange. I compare the two products more fully in my guide to DSTs vs. REITs, and my DST guide covers direct ownership.

How to evaluate DST fees and returns, step by step

Here's a process you can follow for each offering.

Step 1: Know your own numbers first

Ask your CPA what tax you'd owe if you sold without an exchange. Every fee should be measured against that number. A large load to defer a small tax can leave you worse off.

Step 2: Confirm you can invest

Most DSTs are private placements sold only to accredited investors. The SEC's accredited investor bulletin says an individual generally qualifies with income above $200,000 in each of the past two years ($300,000 with a spouse or spousal equivalent) and a reasonable expectation of the same this year, or net worth above $1 million not counting a primary home. Certain licenses also qualify.

Step 3: Add up the load

Find the Estimated Use of Proceeds table in the PPM. Add up everything that isn't the purchase price or reserves. Divide by the equity raised. Write that number down, along with reserves as a separate figure.

Step 4: Convert ongoing fees into dollars

List each ongoing fee and its base: revenue, equity, price or flat. Convert each to dollars per year on your investment. Note whether any fee is subordinated to investor distributions or can be deferred.

Step 5: Read the exit terms

Find the disposition fee and its base. Find any promote and read the hurdle word for word. Does the hurdle count distributions already paid? Is it a return of capital only, or capital plus a stated return?

Step 6: Read the projected distributions with care

Look at every year of the projection, not just year one. Ask what share comes from property operations and what share comes from reserves or other sources. Check whether the loan is interest-only and when that ends.

Step 7: Run three sale scenarios

Build a simple table like my worked example. Use a flat value, a modest rise and a decline. Work out cash back at sale, total return, equity multiple and, if you can, IRR. You'll see how much the outcome depends on the sale.

Step 8: Find the break-even rise

Figure out how much the property must rise for you to get your original equity back at the sale. If the answer is large, ask whether the market and the hold period make that reasonable.

Step 9: Compare across offerings

Line up two or three offerings with the same table. Compare the load, the yearly fees in dollars, the exit fees and the break-even rise. Compare the distribution rate last, not first. My guide on how to read a DST offering walks through the rest of the PPM.

Step 10: Check with your advisors

Send the numbers to your CPA and attorney. Make sure your qualified intermediary knows which offerings you're considering and your deadlines.

Mistakes to avoid with DST fees and returns

These are common and costly.

1. Treating the distribution rate as your return. It measures cash flow only. Your return depends on the sale.
2. Choosing the highest projected rate. A high rate can come from more debt, an interest-only loan, a weaker tenant or thin reserves. Ask why it's high.
3. Ignoring the denominator. A fee on purchase price is bigger than the same rate on equity whenever there's debt.
4. Skipping the exit fees. Disposition fees and promotes come years later, but they come out of your money.
5. Not reading the hurdle. "After return of capital" and "after capital plus a stated return" can mean a very different split.
6. Counting reserves as fees, or fees as reserves. Reserves stay in the trust. Fees don't. Keep them separate when you compare.
7. Assuming distributions are all income. Part can be a return of your own capital, especially early.
8. Comparing pretax and after-tax numbers. A tax-adjusted yield isn't comparable to a pretax rate on another product unless you convert both the same way.
9. Forgetting the tax you deferred. Depreciation sheltering today can mean more gain later. Plan the exit with your CPA.
10. Paying a big load for a small deferral. If your gain is modest, the load can cost more than the tax you'd defer. Run the comparison.

What are the risks?

DST interests are speculative, illiquid securities. Fees are only one risk among many. Before investing, read the full PPM, including its risk factors.

• Loss of principal. Property values can fall. You can lose some or all of your investment.
• Distributions are not guaranteed. They can be reduced or stopped. Some may be a return of your own capital.
• Illiquidity. There is generally no public market for DST interests. The SEC's private placement bulletin says investors "should be prepared to hold the securities indefinitely."
• Fees and load. Upfront and ongoing fees reduce the money invested in real estate and the cash that reaches you.
• Limited control. You have no say in management, leasing, financing or the timing of the sale.
• Leverage. Debt magnifies losses as well as gains, and a loan maturity can force a sale at a bad time.
• Reliance on the sponsor. Sponsor affiliates often run the trust, the property and the master lease. Their skill, finances and conflicts directly affect your results.
• Projections can be wrong. Projected distribution rates and sale prices are estimates. Actual results can differ a lot.
• Tax risk. If the trust or your exchange doesn't meet the rules, you could owe tax. Tax law can change.

FINRA put the cost question plainly in Notice 05-18. It told firms to consider "whether the fees and expenses associated with TIC transactions outweigh the potential tax benefits to the customer." TICs were the forerunner of DSTs, and the same question is worth asking about any DST.

How I review DST fees before I show you an offering

My background is in applied mathematics and applied statistics, which I studied at Babson College. Before founding Baker 1031 Investments, I spent years in real estate acquisitions, management and development at ValueRock Realty Partners, Faris Lee Investments, Westport Capital Partners and Arbor Bay Capital Partners. I've been involved in more than $10 billion of real estate investment activity.

My team and I review every DST across five areas, and we partner with outside auditors in each one:

1. Broker-dealer review
2. Investment manager audit
3. Investment offering review
4. Real estate assessment
5. Institutional underwriting

That review is continuous, not a one-time check. I offer DSTs from more than 20 institutional sponsors. I also track more than 1,100 full-cycle 1031 DST investments for performance. Full-cycle means the property was bought, held and sold.

When we review offerings together, I'll tell you why I'm considering each one, what I like and where I have reservations. You can see the offerings I currently have available once you're ready to look at specifics.

Securities are offered through Aurora Securities, Inc., member FINRA/SIPC. Baker 1031 Investments is independent of Aurora.

What my data shows

Here is what my offering records as of October 2026 show, across 76 DST offerings from 38 sponsors. These figures describe the offerings I track. They are not a forecast or a promise about any future offering.

Projected year-1 distribution rates

The headline number for this topic: among the 71 offerings that published a projected year-1 distribution rate, the median was 4.7%. The range ran from 4.0% to 9.0%.

These are year-1 projections. They aren't total returns, they are not guaranteed, and they say nothing about the sale. When any projected rate stands out, ask the sponsor why.

My worked example earlier in this guide is hypothetical. Its fees, distribution rate and returns aren't drawn from, and aren't typical of, the offerings in my records. It shows only that a distribution rate alone can't tell you what you'll earn.

Leverage shapes both fees and yields

36 of 76 offerings (47%) are all-cash, with no loan. In an all-cash DST, a fee stated against the purchase price is close to the same as a fee against your equity. Another 16 offerings (21%) have a loan-to-value ratio above 50%. Loan-to-value, or LTV, is the loan divided by the property's value. Among the offerings that use debt, the median LTV is about 49%.

When debt is about half the cost, a fee quoted against total cost is about twice as large against your equity. Debt can also raise early distributions, especially with interest-only loans. So when you compare a leveraged offering's projected rate with an all-cash one's, you aren't comparing like with like.

Long holds spread the load, and add risk

A projected 10-year hold is the most common, at 31 offerings. Others project 5 to 10 years or 7 years, and a few are 2-year programs.

A longer hold spreads the upfront load over more years of distributions. In a short hold, the property has very little time to rise enough to cover the load. In a longer hold, it has more time, but you also carry more years of ongoing fees and market risk.

Frequently asked questions

What fees does a DST charge?

Most DSTs charge an upfront load that covers selling commissions, offering costs, a sponsor acquisition fee and closing costs. They also charge ongoing asset and property management fees, and often a disposition fee when the property sells. Some include a promote, which is the sponsor's share of profit above a set return.

How much is the load on a typical DST?

It varies too much to quote one number. Add up every item in the PPM's use of proceeds table except the purchase price and reserves, then divide by the equity raised. That gives you the load for the offering in front of you.

Is a DST's distribution rate the same as its return?

No, the distribution rate is yearly cash paid divided by your investment. Your return also depends on what you get back when the property sells, after the load and exit fees. A DST can pay steady distributions and still lose money overall.

What is the average return on a DST?

There isn't one reliable average, because each DST's total return depends on its fees, debt and sale price. In my offering records as of October 2026, the median projected year-1 distribution rate was 4.7% across 71 offerings, but that is projected cash flow, not a total return, and it is not guaranteed. Actual results can differ a lot from projections, so compare the offerings in front of you.

What is a good DST return?

There isn't a single number that makes a DST return "good." It depends on the risk, the leverage, the property type and what you're giving up in liquidity and control. Compare total return and IRR across offerings, not just distribution rates, and measure the fees against the tax you're deferring.

Can DST distributions be cut or stopped?

Yes, DST distributions are not guaranteed. They depend on the property's income and can be cut or stopped by vacancies, rising costs or lender cash management rules. Part of a distribution may also be a return of your own capital.

Do I pay DST fees out of pocket?

No. You invest a set amount, and the fees come out of the offering proceeds and the property's income. You won't see a separate bill, but the fees reduce how much of your money buys real estate and how much cash reaches you.

Why are some DST yields so much higher than others?

Higher projected rates can come from more debt, interest-only loans, a different property type, a riskier tenant or thinner reserves. In my offering records, projected year-1 rates ranged from 4.0% to 9.0%. When a rate stands out, ask the sponsor exactly why.

What is a tax-adjusted yield on a DST?

It's an estimate of what a distribution is worth after income tax. Depreciation can shelter part of a DST's cash flow from current tax, which can make it worth more after tax than the same cash from interest. The tax is generally deferred, not erased, so confirm the details with your CPA.

How long does it take a DST to earn back its fees?

It depends on how much the property rises; in my hypothetical all-cash example, it had to rise about 15% before investors got their original equity back at the sale. At 2% a year, that took about seven years. If values stay flat, the sale alone never earns it back.

Is a DST worth the fees?

For some people, yes, and for others, no. A DST can make sense if you want out of management, need to replace debt or need a fast backup in a 1031 exchange. If your deferred tax is small, the load can cost more than the deferral is worth, so run the numbers first.

How do I compare fees across DST offerings?

Turn every fee into dollars on your own investment. Compare the load, the yearly fees, the exit fees and the break-even rise side by side. Then look at the projected distributions, and ask how each one is funded.

Before you act

This guide is for education only. It isn't tax, legal or investment advice. Please confirm every decision with your CPA, attorney and qualified intermediary. DST interests are offered only by private placement memorandum, most only to accredited investors. They are illiquid, distributions are not guaranteed, and you can lose your entire investment.

Sources

• FINRA (NASD) Notice to Members 05-18, Private Placements of Tenants-in-Common Interests
• Investor.gov, How Fees and Expenses Affect Your Investment Portfolio, Investor Bulletin
• Investor.gov, Real Estate Investment Trusts (REITs)
• Investor.gov, Private Placements under Regulation D, Investor Bulletin
• Investor.gov, Updated Investor Bulletin: Accredited Investors
• IRS Revenue Ruling 2004-86
• IRS Publication 527, Residential Rental Property
• IRS Topic No. 409, Capital Gains and Losses
• 26 U.S.C. § 1411, Net investment income tax (Cornell LII)