Multifamily

Overview

Apartment communities, typically 150 to 500 units, usually Class A or B garden-style or mid-rise. This is the most common asset class in the DST world. Properties are generally stabilized, though some sponsors include light value-add components like unit renovations or amenity upgrades.

Analyst Notes

The rent roll is the document. Read it carefully. Compare trailing twelve-month operating numbers to the sponsor's pro forma and be skeptical of rent growth assumptions above 3 percent in most markets right now. Check the loan terms specifically. A seven-year hold projection paired with a five-year loan term is a refinance risk you're inheriting. Look at insurance and tax line items closely, especially in Florida, Texas, and California. And remember that "Class A new construction" sometimes just means "expensive recently built," not "good real estate."

Advantages

• Diversified tenant base. No single resident default moves the needle on the property.

• Twelve-month leases let rents reset to market regularly, which is a good inflation hedge.

• Long-term housing demand is structurally strong, especially in growth markets where new supply is constrained by land cost or regulation.

Disadvantages

• Operating expenses hit the landlord directly. Property taxes, insurance, payroll, utilities, and turnover costs all flow through.

• Insurance has become brutal in coastal Florida, parts of Texas, and other Sunbelt markets, eating into NOI in ways most pre-2020 underwriting didn't anticipate.

• Loan structures on 2021 and 2022 vintage deals (floating rate, short term, or aggressive bridge debt) created real distress as rates rose. Some DSTs had to do capital calls or restructure.

Frequently Asked Questions (FAQ)

Property Type Performance Averages