DST Property Types: Multifamily, Industrial, Storage and More

Key takeaways

• A DST can own almost any kind of income-producing real estate. The property type decides how the trust earns money, who pays the bills, and what can go wrong.
• Most sectors fall into one of three income models: one tenant on a long lease, many tenants under a master lease, or an operating business such as a hotel or senior housing community.
• In my offering records as of October 2026, the three largest property types are multifamily (31 of 76 offerings), industrial (18) and net lease (15). Self-storage (5), retail (4) and medical office (3) round out the list.
• No property type is free of risk. Each sector has its own weak spots, from tenant credit in net lease to operator skill in senior housing and new supply in self-storage.
• Property type also affects your taxes. Apartments and other residential rentals generally depreciate over 27.5 years, while most commercial buildings use 39 years.
• DST interests can qualify as 1031 replacement property, but they are illiquid securities. Distributions are not guaranteed, and you can lose your entire investment.

What are DST property types?

A Delaware Statutory Trust, or DST, is a trust that owns real estate. Many investors each buy a share of it. The trust holds the deed, and you hold a "beneficial interest," which is a share of the trust. If you are new to the structure, my complete guide to Delaware Statutory Trusts explains the rules, the costs and the risks from the ground up. This guide does one narrower job. It walks through the kinds of buildings a DST can hold.

"Property type" is the industry term for what a building is used for. An apartment community is one property type. A warehouse is another. A hotel is a third. People also call these "sectors" or "asset classes." I use all three words in this guide, and they mean the same thing here.

Why does it matter? Because a DST is passive. You can't fix a roof, sign a lease or fire a manager. The sponsor makes those calls within strict limits. So the property type you pick is one of the few real choices you make. It shapes almost everything after that.

Here is what property type controls:

• Who pays the rent. One big company, hundreds of households, or thousands of nightly guests.
• How long leases run. Fifteen years, twelve months, or one night.
• Who pays the expenses. The tenant, the trust or a master tenant.
• How the trust's income can change. Slowly, through fixed rent bumps, or quickly, through daily pricing.
• What can go wrong. A tenant can leave, a competitor can build next door, or an operator can stumble.
• How the building is taxed. Residential and commercial buildings depreciate on different schedules.

A sponsor is the real estate company that buys the property, sets up the trust, writes the offering documents and runs the asset. Sponsors often focus on one or two property types. That focus is worth noticing, and I come back to it later.

How do DSTs earn income from different property types?

Before we go sector by sector, it helps to see the three basic ways a DST earns money. Almost every property type fits into one of them. Once you know which model you're looking at, you know which questions to ask first.

Model 1: One tenant on a long net lease

A net lease is a lease where the tenant pays most or all of the property's taxes, insurance and upkeep on top of rent. A "triple net" or NNN lease pushes all three costs to the tenant. The trust is a simple landlord that collects rent.

This is the setup the IRS studied in Revenue Ruling 2004-86, the ruling that made DSTs work for 1031 exchanges. That ruling's trust owned one property leased to one tenant under a net lease. Net lease retail, many industrial buildings, some medical buildings, government-leased offices and data centers often use this model.

The upside is simplicity. The risk is that everything rides on one tenant's ability and willingness to pay.

Model 2: Many tenants under a master lease

Rev. Rul. 2004-86 doesn't let the trustee sign new leases, except when a tenant goes bankrupt or becomes insolvent. That's a problem for an apartment building, where leases turn over every month.

The fix is a master lease. The trust leases the whole property to one company, the master tenant, which is usually a sponsor affiliate. The master tenant then signs all the individual leases with residents or businesses. Apartments, student housing, build-to-rent homes, self-storage and multi-tenant retail centers often use this model.

The upside is diversification across many tenants. The risk is that the trust depends on the master tenant's finances, and the property's income can swing with the local market.

Model 3: An operating business

Some property types are really businesses that happen to sit in a building. A hotel sells rooms by the night. A senior housing community sells housing plus meals, care and activities. A marina may sell slip rentals, fuel and repairs.

A DST can't run a business directly without risking its tax status. So these deals usually use a master lease to an affiliate, which then hires a professional operator. The trust's income depends on how well that business runs.

The upside is that revenue can adjust quickly. The risk is that revenue can fall quickly, too, and labor and operating costs sit closer to your money.

The three models side by side

Keep this table in mind as you read the sector sections. Each one builds on it.

Which property types can qualify for a 1031 exchange through a DST?

Under Section 1031, you can defer gain when you exchange real property held for investment or business use "solely for real property of like kind." "Like kind" is broad for real estate. An apartment building can generally be exchanged for a warehouse, a hotel or land. You don't have to stay in the same sector.

The Treasury regulation that defines real property for Section 1031, 26 CFR 1.1031(a)-3, gives a long list of examples. It names apartments, hotels, motels, warehouses, factories, office buildings and stores as buildings. It also lists parking facilities and power generation and transmission facilities as other permanent structures. One of its examples involves a marina. It concludes that the boat slips "are water space superjacent to land and thus are real property."

That breadth is why so many sectors show up in DSTs. A properly structured DST interest can qualify as replacement property, whatever the building type, if the other rules of Section 1031 are met.

The personal property catch

Some property types come with a lot of things that aren't real estate. Hotels have beds, furniture and kitchen equipment. Senior housing has dining rooms full of tables and chairs. These items are personal property, not real property.

Since 2018, Section 1031 applies only to real property. If part of the price of a DST is assigned to personal property, that part may not count as like-kind replacement property. Ask the sponsor how it allocated the purchase price. Then ask your CPA how it affects your exchange. This is not tax advice, and the answer depends on your facts.

Energy royalty interests

Some net lease programs in my records hold oil and gas royalty interests instead of buildings. The regulation's definition of real property includes "unsevered natural products of land." Whether a specific royalty interest counts as real property can depend on state law and the documents. Your tax advisor should confirm it before you rely on it.

Multifamily DSTs

Multifamily means apartments: buildings or communities with many separate homes for rent. It's the most common property type in my offering records, at 31 of 76 offerings (41%).

How a multifamily DST works

A multifamily DST almost always uses a master lease. The trust leases the whole community to a master tenant. The master tenant hires a property manager, who leases units to residents, usually for 12 months at a time. Rent comes in from hundreds of households, not one company.

The trust's income depends on two things: how many units are rented (occupancy) and what they rent for. Because leases turn over all year, rents can move up or down within months.

What drives the numbers

Apartment owners usually pay the big expenses themselves. That includes property taxes, insurance, repairs, utilities in common areas, staff and marketing. In a master lease, those costs come out of the property's revenue before the trust gets paid. When insurance or property taxes rise faster than rent, the money left over shrinks.

Specific risks of multifamily DSTs

• New supply. When developers finish new buildings nearby, the property may need to offer lower rents or move-in specials to stay full.
• Expense growth. Insurance, property taxes and payroll can rise faster than rents.
• Rent rules. Some states and cities limit how much rent can rise. The rules can change after you invest.
• Master tenant funding. The master lease is only as strong as the master tenant's capital.
• Renovation plans. Some deals assume rent increases from upgrades. If the work costs more or rents don't rise, the plan falls short.

What to look for in a multifamily offering

I look at occupancy history, the rent assumptions compared with nearby buildings, the expense growth assumed in the projections, the size of the capital reserve compared with the building's age, and how many new units are under construction within a few miles.

Industrial DSTs

Industrial covers buildings used to store, move or make goods. That includes distribution warehouses, last-mile delivery buildings, manufacturing plants, flex buildings and small-bay industrial. Small-bay industrial means buildings split into smaller spaces for local businesses like contractors and suppliers. Industrial is the second most common type in my offering records, at 18 of 76 offerings (24%).

How an industrial DST works

Many industrial DSTs own one building leased to one tenant on a net lease. Others own a group of buildings with several tenants, sometimes with a master lease. The tenant often pays taxes, insurance and most upkeep.

Industrial buildings are fairly simple structures: walls, a roof, a concrete floor, loading docks and parking for trucks. That simplicity can mean lower upkeep than an apartment community. But the roof and the parking lot are big-ticket items, and who pays for them depends on the lease.

Specific risks of industrial DSTs

• Tenant concentration. With one tenant, a move-out takes income to zero until the space is leased again.
• Re-leasing cost. Finding a new tenant can mean months of vacancy, broker commissions and money for improvements.
• Special-purpose buildings. A plant built for one manufacturing process may be hard to lease to anyone else.
• New supply. Large warehouses can be built fairly quickly, and new space nearby can pressure rents.
• Changing logistics. How companies store and ship goods changes over time, and a building's layout or location can fall out of favor.

What to look for in an industrial offering

I look at the tenant's financial strength, how long the lease runs compared with the sponsor's planned hold, what the building would rent for today, and how specialized it is. I also check who pays for the roof and the parking lot.

Net lease DSTs

Net lease DSTs usually own one or more buildings leased to single tenants on long net leases. The tenants are often national or regional retailers, pharmacies, restaurants, auto service shops or other businesses. Net lease is the third largest category in my offering records, at 15 of 76 offerings (20%). In my records, that category includes energy royalty programs.

How a net lease DST works

The trust collects rent. The tenant pays most or all of the operating costs. Leases are often long when they start, and many include set rent increases, such as a small bump every year or every five years.

Because the lease is set, income tends to be predictable while the tenant pays. That's the appeal. The trade-off is that income can't grow faster than the lease allows, even if costs or market rents rise.

Energy royalty programs

Some programs in this category hold mineral and royalty interests in oil and gas instead of buildings. One portfolio on my platform holds 14 royalty properties with 27 producing wells in Oklahoma's Anadarko Basin and Texas's Permian Basin. Another holds about 1,277 net royalty acres with interests in more than 200 producing wells, roughly 90% natural gas, in the Permian Basin and the Haynesville Shale.

Third-party operators run the wells. The owner receives a share of production revenue and doesn't pay drilling or operating costs. Royalty income rises and falls with energy prices and production. Wells also produce less over time. These are very different from a leased building, so I treat them as their own kind of risk.

Specific risks of net lease DSTs

• Tenant credit. If the tenant weakens or files for bankruptcy, rent can stop.
• Lease term left. If the lease ends near the sponsor's planned sale date, a buyer may pay less.
• "Going dark." A tenant can stop operating in a store but keep paying rent. That can still hurt value, because a closed store looks risky to the next buyer.
• Fixed rent. Set rent bumps can trail inflation.
• Single-use buildings. A building designed for one brand can cost a lot to convert for another tenant.

What to look for in a net lease offering

I look at the tenant's financial reports, whether a parent company stands behind the lease, the years of lease term left, the rent compared with nearby market rents, and what the building would be worth empty.

Medical office DSTs

Medical office buildings house doctors, dentists, outpatient surgery centers, imaging centers, labs and clinics. Some sit on a hospital campus. Others are in neighborhoods near where patients live. Medical office is a small slice of my offering records, at 3 of 76 offerings.

How a medical office DST works

A medical office DST might own a building leased to one health system on a net lease. It might also own a multi-tenant building with a master lease. Tenants often spend heavily on specialized buildouts, such as exam rooms, plumbing, imaging equipment rooms and shielding. Those costs can make moving expensive for a tenant. That's a reason some tenants stay, but it's not a promise that any tenant will renew.

Specific risks of medical office DSTs

• Tenant health and payment changes. Medical practices depend on payments from insurers and government programs. Changes to those payments can strain tenants.
• Consolidation. When health systems merge or practices are bought, the new owner may move or close locations.
• Buildout costs. Re-leasing to a new medical tenant can require costly changes.
• Location. A building that depended on a nearby hospital can lose appeal if the hospital moves or shrinks.

Office DSTs

Office DSTs own traditional office buildings, the kind that house company headquarters, law firms, accountants and other businesses. Some DSTs have owned them. Office doesn't appear as its own category in my offering records as of October 2026.

How an office DST works

An office DST might own one building leased to one company on a net lease. It might also own a multi-tenant building with a master lease, where a manager handles many tenants on leases of different lengths. In many multi-tenant office buildings, the landlord pays a large share of the operating costs and passes some of them through to tenants.

Specific risks of office DSTs

• Re-leasing costs. New tenants often want walls moved, new finishes and rent concessions. Those costs can be large compared with the rent.
• Changing space needs. Companies can shrink their offices, share space or let employees work elsewhere, which can reduce demand for a building.
• Tenant concentration. A building with one or two large tenants can lose much of its income if one leaves.
• Older buildings. Older buildings may need costly upgrades to compete with newer ones.

What to look for in an office offering

If you see an office DST, focus on lease terms, when each lease ends, tenant credit and the reserve set aside for future leasing costs.

Self-storage DSTs

Self-storage facilities rent units to people and businesses that need extra space. A facility might have hundreds or thousands of units. Self-storage makes up 5 of 76 offerings in my records.

How a self-storage DST works

Customers usually rent month to month. That's a lot of short "leases," so self-storage DSTs typically use a master lease to a sponsor affiliate. A professional operator runs the facility, sets prices, handles marketing and collects rent. Pricing can change often, sometimes weekly.

Storage buildings are fairly simple. There are no kitchens or bathrooms in the units. But the facility still needs staff or remote systems, security, gates, roofs and paving.

Specific risks of self-storage DSTs

• New supply. Storage facilities can be built fairly quickly. A new facility a few miles away can pull customers and push down prices.
• Pricing pressure. Because customers can leave on short notice, rates can fall quickly when competition rises.
• Operator skill. Online marketing and pricing systems matter a lot. A weak operator can leave money on the table.
• Property taxes. Storage revenue can grow, but so can tax bills after a sale is recorded at a higher price.

What to look for in a self-storage offering

I look at the operator's track record, what's under construction within a few miles, how much of the projected growth comes from raising rates on existing customers, and how full the facility has been over time.

Retail and grocery-anchored DSTs

Retail DSTs own stores and shopping centers. Some are single-tenant net lease stores, which I covered above. Others are multi-tenant centers anchored by a grocery store, with smaller shops like a pharmacy, a bank branch, restaurants and services. Retail makes up 4 of 76 offerings in my records.

How a retail DST works

A grocery-anchored center usually needs a master lease, because smaller tenants come and go. The grocery store, called the anchor, brings shoppers to the center. The smaller tenants depend on that traffic.

Specific risks of retail DSTs

• Anchor risk. If the anchor leaves, smaller tenants may lose business.
• Co-tenancy clauses. Some leases let smaller tenants pay less rent or leave if the anchor closes. One loss can trigger others.
• Changes in shopping habits. Some store types lose sales to online shopping more than others.
• Re-leasing costs. Filling a big empty anchor box can take time and money.

Senior housing DSTs

Senior housing covers communities for older adults. Independent living offers apartments plus services like meals and activities. Assisted living adds help with daily tasks. Memory care serves people with dementia. Senior housing isn't broken out as its own category in my offering records.

How a senior housing DST works

Senior housing is an operating business. Residents pay a monthly fee that covers their apartment and some level of services and care. In a DST, the trust usually leases the property to a master tenant, which hires an experienced operator. The trust's rent depends on the community's revenue, minus the heavy costs of staff, food and care.

Specific risks of senior housing DSTs

• Operator risk. Results depend heavily on how well the operator runs the community. This sector has more exposure to an operating business than most.
• Labor costs. Staffing is the largest expense, and wages and staff shortages can squeeze margins.
• Regulation. Assisted living and memory care are licensed and inspected by states. Rules and penalties vary.
• Occupancy swings. Filling a community takes time. A drop in move-ins can hurt income quickly.
• Personal property. Furniture and equipment are a bigger share of value than in many sectors, which matters for your exchange math.

What to look for in a senior housing offering

I look at the operator's history across many communities, staffing levels and turnover, how much of the revenue comes from care services, state inspection records and how the master tenant is capitalized.

Student housing DSTs

Student housing is apartment communities built for college students, usually near a campus. If you've searched for "student housing real estate," this is the corner of it you can reach through a DST. Student housing isn't broken out as its own category in my offering records.

How a student housing DST works

Student housing is often leased by the bed, not by the unit. A four-bedroom apartment might have four separate leases. Leases often line up with the school year, so most of the property re-leases at once each fall. Parents often co-sign as guarantors. The trust uses a master lease, and a specialized manager runs leasing.

Specific risks of student housing DSTs

• One leasing season. If the property misses its leasing target in the spring and summer, it may carry empty beds for a full year.
• Enrollment changes. If enrollment at the school falls, demand can fall too.
• University decisions. A school can build its own dorms or change rules about living on campus.
• Wear and tear. Turnover is heavy, which can mean higher repair and cleaning costs.
• Distance from campus. Properties farther from campus may compete more on price.

What to look for in a student housing offering

I look at the school's enrollment history, walking distance to campus, pre-leasing for the coming year, new beds planned nearby and the school's own housing plans.

Hotel and hospitality DSTs

Hotel DSTs own hotels, often select-service or extended-stay properties run under a national brand. Hospitality isn't broken out as its own category in my offering records.

How a hotel DST works

A hotel sells rooms by the night. That makes it an operating business, so a DST hotel usually uses a master lease to an affiliate, which hires a management company. Many hotels also pay a brand fee to a hotel company for the name, the reservation system and loyalty programs.

Hotel revenue is measured in occupancy and average room rate. Both can change day to day. That's the fastest-moving income of any sector in this guide.

Tax note on hotels

The regulation defining real property lists "hotels" and "motels" as buildings, so a hotel can be real property for Section 1031. For depreciation, though, a hotel is generally not residential rental property. Under 26 U.S.C. § 168, a dwelling unit doesn't include a unit in a hotel or motel where more than half the units are used on a transient basis. Hotels also hold a lot of furniture and equipment. Ask your CPA how both points affect you.

Specific risks of hotel DSTs

• Fast-moving revenue. Travel slowdowns, local events and new competing hotels can cut revenue within weeks.
• Brand requirements. The brand can require costly renovations, called property improvement plans, to keep its flag.
• Labor and operating costs. Housekeeping, front desk and maintenance costs are heavy and hard to cut.
• Seasonality. Many hotels earn much more in some months than others.

Data center DSTs

Data centers are buildings that house computer servers, storage and networking equipment for companies and cloud providers. Data centers aren't broken out as their own category in my offering records.

How a data center DST works

A DST data center deal usually owns the building and land, leased to one tenant on a long net lease. Often the tenant owns the servers and much of the equipment. The building's value depends heavily on its power supply, cooling systems and network connections. The real property regulation lists "power generation and transmission facilities" among permanent structures, but which components count as real property in a specific deal is a question for your tax advisor.

Specific risks of data center DSTs

• Technology change. Servers and cooling needs change fast. A building designed for today's equipment may need costly upgrades later.
• Tenant concentration. Many deals rely on one tenant.
• Power. A data center depends on large, reliable power supplies and the cost of that power.
• Specialized design. If the tenant leaves, the building may be hard to re-lease without major spending.

Government-leased DSTs

Government-leased DSTs own buildings leased to a government agency. Often that agency is part of the federal government, through the General Services Administration (GSA). GSA describes itself as "the nation's largest public real estate organization, providing workspace for over one million federal workers," according to its leasing overview. Government-leased property isn't broken out as its own category in my offering records.

How a government-leased DST works

The trust is the landlord. The agency is the tenant, usually under a long lease. Buildings range from field offices to clinics to specialized facilities.

A government tenant is not the same as a promise of payment. Rent depends on the agency continuing to need the space and on funding. Some government leases let the agency end the lease early with notice. Read the lease summary in the offering documents closely.

Specific risks of government-leased DSTs

• Early termination rights. The tenant may be able to leave before the full lease term ends.
• Changing space needs. Agencies consolidate, downsize or move as policies and budgets change.
• Specialized buildouts. Security features and custom layouts can make the space hard to re-lease.
• Single tenant. If the agency leaves, income can fall to zero.

Manufactured housing DSTs

Manufactured housing communities are neighborhoods of factory-built homes. In many communities, residents own their homes and rent the lot underneath. The community owner owns the land, roads, water and sewer lines, and shared amenities. Manufactured housing isn't broken out as its own category in my offering records.

How a manufactured housing DST works

The trust owns the land and infrastructure and uses a master lease. A manager collects lot rent from residents. Some communities also own homes and rent them out. Whether a particular home counts as real property can depend on how it's attached and on state law, so ask the sponsor how it's treated.

Specific risks of manufactured housing DSTs

• Aging infrastructure. Older communities may have water, sewer and road systems that need costly repair.
• Rent rules. Some states and cities limit lot rent increases or add other resident protections.
• Resident finances. Some residents have limited incomes, so rent increases can lead to turnover or collection issues.
• Reputation. Large rent increases can draw public attention and local pushback.

Life science DSTs

Life science buildings house laboratories and research space for biotech, pharmaceutical and medical device companies. They often mix lab space with offices. Life science isn't broken out as its own category in my offering records.

How a life science DST works

These are usually net lease or multi-tenant buildings with heavy, specialized buildouts. Labs need extra ventilation, stronger floors, special plumbing and backup power.

Specific risks of life science DSTs

• Tenant credit. Many tenants are young companies that rely on raising money. If funding dries up, they may shrink or close.
• Buildout costs. Re-leasing a lab can cost much more than re-leasing an office.
• Location clusters. Demand tends to center on a handful of research hubs. A building outside one may have fewer potential tenants.

Marina DSTs

Marinas rent boat slips and dry storage. Many also sell fuel, run repair shops and lease space to restaurants or shops. Marinas aren't broken out as their own category in my offering records.

How a marina DST works

A marina is partly real estate and partly an operating business. A DST usually leases the marina to a master tenant, which hires an operator. As noted above, the real property regulation's own example treats boat slips and end ties as real property.

Specific risks of marina DSTs

• Weather. Storms and hurricanes can damage docks and buildings and close the marina for repairs.
• Seasonality. Many marinas earn most of their revenue in a few warm months.
• Waterfront rules. Marinas can depend on government leases of submerged land, environmental permits and dredging.
• Business income. Fuel and service revenue moves with boating activity.

Build-to-rent and single-family rental DSTs

Build-to-rent communities are groups of single-family houses or townhomes built from the start to be rented, not sold. Single-family rental DSTs may also own houses scattered across a metro area. This category isn't broken out separately in my offering records.

How a build-to-rent DST works

These deals look a lot like multifamily. The trust uses a master lease, a manager leases homes to households on 12-month leases, and the trust's income depends on occupancy and rent. The homes are spread out, so maintenance and management can cost more per home than in an apartment building.

Specific risks of build-to-rent DSTs

• Lease-up. A newly built community starts empty. If it fills slowly, income falls short of projections.
• New supply. Other build-to-rent communities and homes for sale compete for the same households.
• Operating costs. Lawns, roofs and HVAC systems for many separate houses add up.
• Property taxes and HOA dues. These can rise after purchase.

Land and ground lease DSTs

A DST can also own land that it leases to a tenant under a ground lease. A ground lease is a long lease of just the land. The tenant usually builds and owns the building on top, pays the property costs and pays rent to the landowner. When the ground lease ends, the land, and often the building, may go back to the owner, depending on the lease terms. Land and ground leases aren't broken out as their own category in my offering records.

Land counts as real property for Section 1031, so a properly structured DST interest that owns land can qualify as replacement property. Land itself doesn't depreciate, though. That means a land DST generally gives you little or no depreciation to offset its income.

Specific risks of land and ground lease DSTs

• Lease terms decide everything. Rent, rent increases and what happens at the end of the lease are all set in the ground lease. Read them closely.
• Tenant credit. Income depends on the tenant continuing to pay. If the tenant defaults, the trust may end up with the building, along with its costs.
• Fixed rent. Rent increases are often set far in advance and may not keep up with inflation or land values.
• No depreciation. With no building to depreciate, more of the income may be taxable each year. Ask your CPA.

DST property types compared

Here is a side-by-side view of the sectors in this guide. These are general patterns, not rules. Every offering is different, so the PPM, or private placement memorandum, always wins over a table like this.

"Ask your CPA" means the answer depends heavily on the specific facts. Even where I list a class, your CPA decides how it applies to your share. That includes how much of your basis carried over from your old property.

How does property type affect your taxes?

Property type changes how fast you can depreciate your share of the building. Depreciation is a yearly tax deduction for wear and tear. It can lower the taxable income from your DST below the cash you receive.

Under 26 U.S.C. § 168, residential rental property uses a 27.5-year recovery period. Nonresidential real property uses 39 years. A building counts as residential rental property if 80% or more of its gross rental income comes from dwelling units. That's why apartments, student housing and build-to-rent homes usually land in the 27.5-year group, while warehouses, stores and offices land in the 39-year group. Land itself doesn't depreciate.

A worked example: 27.5 years vs. 39 years

This is a hypothetical with round numbers. It doesn't represent any offering, and it isn't tax advice.

Say your share of a DST includes $1,000,000 of new depreciable building basis. Here's the simple straight-line math, ignoring the partial first year:

The apartment share produces about $10,700 more in yearly deductions. That can reduce the taxable portion of your distributions in the early years. But depreciation also lowers your basis. When the property eventually sells in a taxable sale, that depreciation can be taxed back. The IRS explains that this portion, called unrecaptured section 1250 gain, is taxed at a maximum 25% rate. Depreciation shifts tax into the future. It doesn't erase it.

In a 1031 exchange, much of your basis usually carries over from your old property on its old schedule. Only the extra basis typically starts a new schedule. So your real numbers can look very different. My guide to DST tax reporting and depreciation explains how the annual statement works. Please confirm everything with your CPA.

A worked example: one tenant vs. many tenants

This is a hypothetical with round numbers. It doesn't represent any offering or any client.

Say two DSTs each collect $1,000,000 a year in rent.

DST A owns one warehouse leased to one tenant. If that tenant leaves, rent falls from $1,000,000 to $0 until the space is re-leased. Re-leasing might take a year and cost money for broker commissions and improvements.

DST B owns a 100-unit apartment community. Each unit rents for about $10,000 a year in this simplified example. If 10 units sit empty, rent falls by about $100,000, or 10%.

This doesn't make DST B the better choice. DST B pays its own expenses, so its net income can shrink even with full occupancy if costs rise. DST A may have years of steady rent from a strong tenant. The point is that the risks are different in kind. When you compare offerings, you're choosing which risks you'd rather hold.

How to evaluate a DST's property type, step by step

When I look at a new offering, I work through property type in a set order. You can use the same steps. My guide on how to read a DST offering goes deeper on the PPM itself.

Step 1: Name the income model

Is this one tenant on a net lease, many tenants under a master lease, or an operating business? That one answer tells you where to spend your time.

Step 2: Find out who pays the expenses

Look for a summary of the lease. Who pays property taxes, insurance, roof repairs and parking lot repairs? If the trust or master tenant pays, study how expenses are projected to grow.

Step 3: Study the tenant or the operator

For a net lease, read what the PPM says about the tenant's finances and whether a parent company stands behind the lease. For an operating business, look at the operator's history running similar properties, including in tough years.

Step 4: Compare lease terms with the planned hold

If the lease ends in year 9 and the sponsor plans to sell in year 10, a buyer will price in the risk of a vacancy. Lease term left at sale matters as much as lease term today.

Step 5: Check the local supply

Ask what's being built nearby. New supply matters most in multifamily, self-storage, build-to-rent, student housing and hotels.

Step 6: Look at the sponsor's track record in this sector

A sponsor that has owned self-storage for many years brings different experience than one doing its first storage deal. Ask how the sponsor's past deals in this property type turned out after they sold.

Step 7: Match the reserve to the building

Read the property condition report. Compare it with the capital reserve set aside at closing. A trust generally can't raise new money later, so the reserve has to cover what the building is likely to need.

Step 8: Fit it into your whole plan

Think about what else you own. If your exchange money is all in apartments in one state, adding more of the same concentrates your risk. My guide on how many DSTs you should own covers splitting an exchange across sectors, sponsors and regions.

Step 9: Bring in your advisors

Ask your CPA about depreciation, personal property and state tax filings. Ask your attorney to review anything unusual in the documents. Ask your qualified intermediary about identification and timing.

Mistakes to avoid when choosing a DST property type

These are the errors I see most often around property type.

1. Picking a sector because of a headline. News stories about a "hot" property type tell you nothing about one specific building, tenant or price.
2. Comparing projected distributions across sectors without context. A higher projected rate can reflect more risk, more debt, a shorter lease or a weaker tenant. Ask why it's higher. My guide to DST debt and leverage explains how loans change that math.
3. Treating a government or big-name tenant as risk-proof. Strong tenants can still leave, shrink or have early exit rights.
4. Ignoring the operator. In hotels, senior housing, self-storage and marinas, the operator's skill drives the results.
5. Forgetting personal property. Furniture and equipment may not count as like-kind real property. Ask how the price was allocated.
6. Missing the lease end date. A long lease today can be a short lease at the planned sale.
7. Overlooking expense growth. In master lease sectors, rising insurance and property taxes come out of the property's income.
8. Stacking the same sector. Several DSTs in the same property type and the same metro area may move together.
9. Assuming every sector fits a 1031 the same way. Some structures, like royalty interests or homes in manufactured housing communities, need a closer look at what counts as real property.
10. Skipping the risk factors. Every PPM has a section on sector-specific risks. Read it, and read it twice.

How I look at property type in my review

My background shapes how I read these deals. I studied applied mathematics and applied statistics at Babson College. 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. How the offering has been vetted on the securities side.
2. Investment manager audit. The sponsor's track record, team and financial strength, including in the property type it's offering.
3. Investment offering review. The PPM, the fees and the legal terms.
4. Real estate assessment. The property, the market, the tenants and the physical condition.
5. Institutional underwriting. Stress-testing the numbers the way an institutional buyer would.

The 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, so we can see what really happened.

When we talk, I'll walk you through the offerings I currently have available, across whatever property types are open at the time. I'll tell you why I'm considering each one, what I like and where I have reservations. Securities are offered through Aurora Securities, Inc., member FINRA/SIPC. Baker 1031 Investments is independent of Aurora.

What are the risks that apply to every property type?

Each sector has its own risks, but some apply to every DST, whatever it owns. My guide to DST risks covers them in full.

• Loss of principal. Property values can fall, and you can lose some or all of your investment.
• Distributions are not guaranteed. They can be reduced or stopped.
• Illiquidity. The SEC's investor bulletin on private placements warns that "you should be prepared to hold the securities indefinitely."
• Limited control. You have no say in leasing, financing or when the property sells.
• Reliance on the sponsor. Sponsor affiliates usually run the property and may act as master tenant.
• Concentration. FINRA's Notice to Members 05-18 told firms selling fractional real estate to "consider the risks from over-concentration against the benefits of tax deferral."
• Fees. Up-front and ongoing fees reduce the amount invested in real estate and your returns.
• Tax risk. If a trust or your exchange doesn't follow the rules, deferred gain can become taxable. Tax laws can change.

Most DSTs are sold only to accredited investors. Under the SEC's accredited investor rules, 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. Holding certain licenses in good standing, such as the Series 7, 65 or 82, also qualifies.

What my data shows

I keep records on every offering that reaches my desk. Here is how my offering records as of October 2026 break down by property type. The set includes 76 DST offerings from 38 sponsors. These figures describe the offerings I track. They aren't a forecast and say nothing about how any sector will perform.

Apartments lead in my offering records

The headline number: multifamily accounts for 31 of 76 offerings (41%). Industrial and net lease follow.

What this means for you

First, if you want apartments, you'll usually have more choices than in other sectors. That makes it easier to compare sponsors, markets and debt levels side by side.

Second, the smaller sectors are thin. With 3 medical office offerings and 5 self-storage offerings, your choices at any one time may be limited. Offerings in smaller sectors can fill and close, so ask early what's available. My guide to DST listings explains what each status label means.

Third, the sectors in this guide that aren't in the table, such as senior housing, student housing, hotels, data centers, government-leased, manufactured housing, life science, marinas, build-to-rent, office and land, aren't broken out as separate categories in my records. You may still see them in the wider market. I wrote about them here so you know how they work and what to ask.

Where the properties sit

The offerings span 33 states. The most common are Florida (14), Texas (13), North Carolina (8) and Georgia (7). Location and property type go together. An apartment community in a fast-growing metro and one in a slower one carry different supply and rent risks, even inside the same sector.

Other numbers worth knowing

The median minimum investment is $100,000, and 21 offerings (28%) start at $25,000. Lower minimums make it easier to own more than one property type. On debt, 36 of 76 offerings (47%) are all-cash, with no loan at all. A projected hold of 10 years is the most common, at 31 offerings.

Frequently asked questions

What types of properties are in DSTs?

DSTs can own almost any income-producing real estate. Common types include apartments, industrial warehouses, single-tenant net lease buildings, self-storage, retail centers and medical offices. Less common types include senior housing, student housing, hotels, data centers, government-leased buildings, manufactured housing, life science labs, marinas, build-to-rent homes, office buildings and ground-leased land.

Can a DST own more than one property?

Yes. Some DSTs hold several properties in one trust, often called a portfolio DST. That spreads tenant and property risk, but you still have one sponsor, one set of documents and one sale timeline.

What is the most common DST property type?

In my offering records as of October 2026, multifamily is the most common, at 31 of 76 offerings (41%). Industrial is next at 18 (24%), followed by net lease at 15 (20%). The mix in the wider market can differ and changes over time.

Is a multifamily DST a good investment?

It depends on the specific property, sponsor, price and debt, and on your goals. Multifamily DSTs spread rent across many households, but they also carry expense growth, new supply and rent regulation risks. Distributions are not guaranteed, and you can lose money.

Can I 1031 exchange a rental house into an industrial DST?

Generally, yes. Real estate held for investment is broadly like-kind to other investment real estate, so a rental house can be exchanged for an interest in a DST that owns a warehouse. You still need to identify within 45 days and close within 180 days (or by your tax return due date, if earlier) and meet your value and debt targets.

What is the difference between a net lease DST and a multifamily DST?

A net lease DST usually has one tenant on a long lease who pays most expenses. A multifamily DST has many residents on short leases, and the property pays its own expenses through a master lease. The first depends heavily on one tenant; the second depends on the local rental market and cost control.

Are self-storage DSTs less risky than other types?

No property type is free of risk. Self-storage has its own risks, including new competing facilities, pricing pressure from month-to-month rentals and dependence on the operator. Compare each offering on its own facts.

How does student housing real estate work in a DST?

A student housing DST owns apartments near a college, often leased by the bed on academic-year leases. A master tenant and specialized manager handle leasing. The main risks are missing the yearly leasing season, enrollment changes and new housing near campus.

Do hotel DSTs qualify for a 1031 exchange?

A properly structured DST interest that owns a hotel can qualify as replacement property, since hotels are listed as buildings in the Treasury definition of real property. Hotels also include furniture and equipment, which are personal property and may not count. Ask your CPA and attorney how the purchase price is split.

Does property type change my depreciation?

Yes. Residential rental property generally depreciates over 27.5 years, and most commercial property over 39 years. Your actual deductions also depend on how much basis carried over from your old property, so your CPA should run the numbers.

Should I put all my 1031 money in one property type?

Putting everything in one sector ties your result to that sector's risks. Many investors consider spreading money across property types, sponsors and regions. Diversification does not guarantee a profit or protect against loss.

Are government-leased DSTs backed by the government?

No. The government agency is a tenant paying rent under a lease. It isn't backing your investment. Some government leases allow early termination, and agencies can move or downsize.

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 can qualify as 1031 replacement property, but they are offered only by private placement memorandum to qualified investors, most are for accredited investors only, they are illiquid, and you can lose your entire investment.

Sources

• Internal Revenue Service, Revenue Ruling 2004-86
• 26 U.S.C. § 1031, Exchange of real property held for productive use or investment (Cornell LII)
• 26 CFR § 1.1031(a)-3, Definition of real property (Cornell LII)
• 26 U.S.C. § 168, Accelerated cost recovery system (Cornell LII)
• U.S. General Services Administration, Leasing overview
• Investor.gov, Private Placements under Regulation D, Investor Bulletin
• Investor.gov, Updated Investor Bulletin: Accredited Investors
• FINRA (NASD) Notice to Members 05-18
• IRS Topic No. 409, Capital Gains and Losses