--- title: "Diversification Strategies for DST Investors: Mitigating Concentration Risk & High Yield Temptation" description: Learn more about mitigating risks from the professionals at FGG1031. image: https://blog.fgg1031.com/hubfs/AdobeStock_1309017848.jpeg --- [info@firstguardiangroup.com](mailto:) [(866)398-1031](tel:(866)398-1031) [![fgg](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/fgg.png)](https://brokercheck.finra.org/individual/summary/6470002) [![fgg-871923](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2023/fgg-871923.png)](https://www.bbb.org/us/ca/san-jose/profile/commercial-real-estate/first-guardian-group-1216-887513) [![logo](https://blog.fgg1031.com/hs-fs/hubfs/FirstGuardianGroup_2022/logo.png?width=175&height=56&name=logo.png "logo")](http://fgg1031.com) - [Home](https://fgg1031.com/) - [About Us](https://fgg1031.com/about-us/) - [Current Offerings](https://fgg1031.com/property-listings-directory/) - [Resource Center](https://fgg1031.com/resource-center/) - [Glossary](https://fgg1031.com/glossary/) - [Accommodators](https://fgg1031.com/accommodators/) - [FAQ](https://fgg1031.com/faqs/) - [Tax eBook](https://pages.fgg1031.com/resources/real-estate-tax-deferral-strategies-ebook) - [Real Estate eBook](https://pages.fgg1031.com/real-estate-investing-in-the-new-era2) - [QI eBook](https://pages.fgg1031.com/resources/qualifiedintermediary/ebook) - [Tax Calculator](https://fgg1031.com/tax-calculator/) - [Newsroom](https://fgg1031.com/newsroom/) - [Blog](https://blog.fgg1031.com/blog) - [Events](https://fgg1031.com/events/) - [Contact Us](https://fgg1031.com/contact/) ![search-interface-symbol](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/search-interface-symbol.png) ![loader](https://f.hubspotusercontent-eu1.net/hubfs/24949188/Business%20and%20Finance/global/22.gif) ![close](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2022/close.png) From Pages From Blog Pages Load More Load More **Sorry, we couldn't find a match for  "".** Check your spelling or try a related search term. [![Register](https://no-cache.hubspot.com/cta/default/5468919/d02a3ee4-7db2-4d64-b925-a6ebbfe26664.png)](https://cta-redirect.hubspot.com/cta/redirect/5468919/d02a3ee4-7db2-4d64-b925-a6ebbfe26664) ![blog-template-banner](https://blog.fgg1031.com/hs-fs/hubfs/Blog%20Banner/blog-template-banner.png?width=1920&name=blog-template-banner.png "blog-template-banner") # Blog ### Subscribe to Our Blog ### Subscribe to Email Updates ## Featured Post   [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) ## [721 UPREIT Options in DST Programs (Part 3)](https://blog.fgg1031.com/blog/721-upreit-options-in-dst-programs) We have previously written two blog posts on 721 UPREIT options which discuss basic concepts which I encourage readers to review prior to reading this b\[...\] [Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [DST](https://blog.fgg1031.com/blog/topic/dst) [721 Exchange](https://blog.fgg1031.com/blog/topic/721-exchange) [UPREIT](https://blog.fgg1031.com/blog/topic/upreit) [Read More](https://blog.fgg1031.com/blog/721-upreit-options-in-dst-programs) ## Recent Posts [Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [1031 Exchange](https://blog.fgg1031.com/blog/topic/1031-exchange) [DST](https://blog.fgg1031.com/blog/topic/dst) # Diversification Strategies for DST Investors: Mitigating Concentration Risk & High Yield Temptation By [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) Concentrating too much capital in a single DST — or chasing unusually high advertised distribution yields — are the two most common ways investors inadvertently increase the risk in what is supposed to be a potentially passive, stable investment. An investor who places all of their exchange proceeds into a single property, asset class, or sponsor has no buffer if that property underperforms, that market weakens, or that sponsor encounters operational difficulties. The solution is a structured approach to diversification across asset classes, geographic markets, and sponsors — combined with a disciplined eye toward yield claims that appear too attractive relative to the broader market. #### **What Are the Risks of Concentrating in a Single DST?** Concentration risk in a DST portfolio arises when a significant portion of invested capital is allocated to a single property, asset class, geographic market, or sponsor. Because DSTs are illiquid — there is no secondary market for interests once invested — an investor who is heavily concentrated has limited ability to adjust their exposure if conditions change during the hold period. The specific risks that concentration creates include: | **Risk Type** | **How Concentration Creates Exposure** | | --- | --- | | Property-level risk | Single-property failure affects the entire invested amount | | Asset class risk | Sector downturns in hospitality, office, or retail can affect entire categories | | Geographic risk | Local economic decline, natural disasters, or regulatory changes impact specific markets | | Sponsor risk | Operational failures or financial difficulties at a single firm affect all that sponsor's offerings |   A well-structured DST portfolio distributes exposure across multiple dimensions so that a problem in any one area does not disproportionately affect the whole. Investors who are using DSTs as 1031 exchange replacement properties have particular reason to prioritize this, since the illiquidity of the structure means they will carry that concentration for the full hold period regardless of what changes. **Key Point: Concentration in a single DST, asset class, or sponsor removes the portfolio buffer that passive investors rely on when they cannot actively manage their positions.** #### **What Is Concentration Risk in a DST Portfolio and Why Does It Matter?** Concentration risk is the exposure created when too much capital is tied to a single investment decision. In the DST context, it most commonly appears in three forms: over-allocation to a single property, heavy exposure to one property type across multiple offerings, and reliance on a single sponsor for the majority of invested capital. The third form — sponsor concentration — is particularly worth understanding. DST sponsors vary significantly in their track record, financial strength, and operational experience. A sponsor with a limited history of full-cycle DSTs — meaning offerings that have completed their hold period, delivered projected distributions throughout, and produced gains for investors upon sale — carries more uncertainty than one with a long and verified record. Concentrating capital with a sponsor who lacks that demonstrated history compounds the normal risks of real estate investment with the additional risk of sponsor-level failure. Because DST interests cannot be sold or transferred during the hold period in most cases, concentration decisions made at the time of investment are effectively locked in. The flexibility to respond to a sponsor difficulty, a market shift, or an asset class downturn simply does not exist in the same way it would with publicly traded securities. This is why building diversification into the initial allocation — before committing capital — is far more important in DST investing than in more liquid asset classes. **Key Point: Sponsor concentration is one of the most overlooked forms of DST risk — investing with sponsors who lack a full-cycle track record amplifies the normal uncertainties of real estate.** #### **Why Are High DST Distribution Yields a Warning Sign?** DSTs are typically structured to offer the potential for predictable annual distributions, possibly supplemented by appreciation upon exit. When a sponsor advertises distribution yields meaningfully above what comparable offerings in the market are targeting, that premium almost always reflects something — and it is rarely a favorable something. ###### High advertised yields in DST offerings tend to correlate with one or more of the following characteristics: Lower-quality properties, including Class B or C assets with older physical plant or deferred maintenance Less desirable locations with weaker demographic trends or declining employment bases Higher-risk asset classes such as hospitality, student housing, or raw land, which are more vulnerable during economic downturns Aggressive underwriting assumptions that project distributions the property may not be able to sustain over the full hold period Reserve structures that fund initial distributions from capital rather than operating income, creating an appearance of stability that may not persist A balanced and sustainable distribution yield — one grounded in the property's actual operating cash flow and supported by conservative underwriting — is a more reliable indicator of long-term income potential than a headline rate designed to attract capital. Investors should ask their advisor to explain exactly how projected distributions are funded and whether the assumptions behind them have been stress-tested against realistic downside scenarios. **Key Point: Distribution yields that appear unusually high relative to comparable offerings typically signal lower property quality, higher-risk asset classes, or unsustainable underwriting assumptions.** #### **How Should DST Investors Approach Asset Class Diversification?** Spreading DST investments across different property types reduces exposure to sector-specific downturns that can affect an entire asset class simultaneously. Not all property categories carry the same risk profile, and a portfolio that blends more historically stable asset classes with selective exposure to higher-return categories is generally better positioned than one concentrated in a single sector. Asset classes with historically more consistent DST performance include multifamily residential, which benefits from necessity-driven demand and the flexibility of short lease terms during inflationary periods, and investment-grade NNN properties leased to strong-credit tenants, where the tenant bears the majority of operating costs. More volatile categories — hospitality, office, senior care, and student housing — may be able to deliver higher targeted returns but are more susceptible to economic disruption and should represent a smaller share of any diversified DST portfolio. The core allocation should favor asset classes with demonstrated resilience, while any exposure to higher-risk categories is sized appropriately relative to the investor's overall risk tolerance and liquidity position. **Key Point: A DST portfolio anchored in multifamily and investment-grade NNN properties, with limited and deliberate exposure to higher-risk asset classes, is better positioned to weather sector-specific downturns.** #### **How Does Geographic Diversification Reduce DST Portfolio Risk?** Real estate markets do not move in unison. Economic conditions, employment trends, population growth, and regulatory environments vary significantly across regions, and a portfolio concentrated in a single market is fully exposed to whatever happens in that geography over the hold period. Geographic diversification across multiple regions helps ensure that a localized downturn — whether from an industry contraction, a natural disaster, or a regulatory shift — does not affect the entire portfolio simultaneously. #### Markets with sustained population growth, diverse employment bases, and landlord-friendly regulatory environments have generally provided stronger operating conditions for DST properties over time. States such as Florida, Texas, the Carolinas, Tennessee, and Arizona have demonstrated these characteristics over multiple cycles. Investors whose entire DST allocation sits within one region, or within markets that share similar economic drivers, are carrying geographic concentration risk that is easy to mitigate through a more deliberate allocation process. **Key Point: Geographic concentration across markets with similar economic drivers carries the same portfolio risk as asset class concentration — both are best addressed at the time of initial allocation.** #### **Why Does Sponsor Diversification Matter in a DST Portfolio?** A DST's operational performance over its hold period is heavily influenced by the sponsor managing it. Even a well-located property in a strong asset class can underperform if the sponsoring firm encounters financial difficulty, makes poor asset management decisions, or lacks the resources to respond effectively to unexpected challenges. Relying on a single sponsor for the majority of an investor's DST capital creates a single point of failure that cannot be corrected once capital is committed. Spreading investments across multiple sponsors with established track records provides access to a broader range of properties and investment structures, and reduces the exposure to any one management team's decisions. An experienced DST advisor maintains relationships across the landscape of reputable sponsors and can help investors structure allocations that balance sponsor concentration with the need to meet 1031 exchange reinvestment requirements within the available timeframe. **Key Point: Diversifying across multiple sponsors with full-cycle track records reduces single-point-of-failure risk that cannot be unwound once DST capital is committed.** #### **How Should Investors Evaluate DST Fee Structures?** DSTs carry several layers of fees that directly reduce net returns, and understanding them before committing capital is an essential part of the evaluation process. The primary fee categories include acquisition fees charged at the time of purchase, ongoing asset management fees during the hold period, and disposition fees assessed at the time of sale. Each of these is disclosed in the Private Placement Memorandum (PPM), and their cumulative effect on net investor returns should be modeled as part of any comparison between offerings. Fee structures vary meaningfully across sponsors, and a DST offering with a higher gross distribution yield may deliver lower net returns than a competing offering with more modest projections and a leaner fee structure. Investors who focus exclusively on advertised yields without accounting for fees are not making an apples-to-apples comparison. An experienced advisor will work through the fee structure of any offering alongside the underwriting assumptions and distribution projections, so that the evaluation reflects what investors actually have the potential to receive rather than what is stated before fees. **Key Point: DST fees — acquisition, management, and disposition — reduce net returns and must be evaluated alongside yield projections to make accurate comparisons between offerings.** #### **Key Takeaways** - Concentrating DST capital in a single property, asset class, geographic market, or sponsor creates risk that cannot be corrected after capital is committed - High advertised distribution yields frequently signal lower property quality, higher-risk asset classes, or unsustainable underwriting assumptions - A well-diversified DST portfolio spans multiple sponsors, at least two asset classes, and three or more geographic regions - Multifamily and investment-grade NNN properties have historically provided the most consistent foundation for DST income stability - Fee structures must be evaluated alongside yield projections — net returns after fees are what investors actually receive #### **FAQ** **Q1: What is concentration risk in a DST portfolio?** A1: Concentration risk is the exposure created when too much capital is allocated to a single DST property, asset class, geographic market, or sponsor. Because DST interests are illiquid and cannot be sold during the hold period, concentration decisions made at the time of investment are effectively locked in for the duration of the hold. A problem in any heavily weighted position has an outsized impact on the overall portfolio with no mechanism for adjustment. **Q2: Why do some DSTs advertise higher distribution yields than others?** A2: Higher advertised yields typically reflect higher underlying risk — through lower-quality properties, less stable asset classes, weaker market locations, or aggressive underwriting assumptions. Some offerings fund early distributions from capital reserves rather than operating income, which can make the initial yield appear more attractive than the property's actual performance supports. Investors should ask their advisor how projected distributions are funded and whether those projections have been stress-tested. **Q3: How many DSTs should an investor hold to achieve meaningful diversification?** A3: There is no universal answer, but a diversified DST portfolio typically involves at least two different sponsors, more than one asset class, and properties across at least three geographic regions. The practical number of individual positions depends on the total equity available and the minimum investment thresholds of each offering. An experienced DST advisor can help structure the allocation to meet both the diversification objective and the reinvestment requirements of the 1031 exchange. **Q4: What makes a DST sponsor track record meaningful for evaluation purposes?** A4: The most relevant track record evidence is full-cycle performance — offerings that have completed their entire hold period, sustained projected distributions throughout, and produced gains for investors upon sale. A sponsor with a long history of completing offerings through market cycles, including stress periods, provides considerably more evaluative confidence than one whose track record only reflects favorable conditions. **Q5: Where can investors review currently available DST offerings?** A5: FGG1031 maintains a current selection of DST offerings across multiple sponsors, asset classes, and geographic markets. Investors can review available options by contacting the team directly to discuss how a specific offering fits within a diversified exchange strategy. Please contact the specialists at First Guardian Group at  to learn more about risk mitigation strategies before committing funds to a DST or other real estate investments.  You can email us at  [info@firstguardiangroup.com](mailto:info@firstguardiangroup.com) or [schedule a no-obligation consultation today!](https://meetings.hubspot.com/pgetty) [![](https://no-cache.hubspot.com/cta/default/5468919/interactive-183027517748.png)](https://blog.fgg1031.com/hs/cta/wi/redirect?encryptedPayload=AVxigLKrPy%2BQ7yqNLfXOdPHWvYwwfncF3dmH8dJjKh0qZ2zKfm9abtnBFME7dfuy158sTQTO6rz9FJsmrv%2BUfRezR3qq92btelf9C0NQNHQRI3OTmgTGvt5iU87WMUqM%2BWrr7PHYxsd2sE2swtr6yRnYxgD6BOqk1n9dpKKpjsbWnhiYdktAXJ%2FVQ40hFYe8C%2BH446J4OrmGO9djFK6TguZoA%2FwCOCwCE0SFGqIEZFJpe8Ee&webInteractiveContentId=183027517748&portalId=5468919) ### [Paul Getty](https://blog.fgg1031.com/blog/author/paul-getty) Paul M. Getty is one of the most experienced 1031 exchange specialists in the United States, with a career in real estate that spans over 35 years and more than $5 billion in commercial transactions across every major asset class. His work covers single-family rentals, apartments, retail, office, multifamily, and student and senior housing, giving him a practical understanding of how different property types perform across market cycles and how investors can move between them using tax-deferred exchange strategies. As President and CEO of FGG1031 | First Guardian Group, Paul advises investors through the full 1031 exchange process, from identifying qualifying replacement properties to structuring acquisitions through Delaware Statutory Trusts (DSTs) and wholly owned real estate. His guidance covers both the compliance requirements of a valid exchange and the investment decisions that determine long-term portfolio outcomes – a combination that is difficult to find in a single advisor. Paul holds a California and Texas real estate broker license and carries Series 22, 62, 63, and 82 securities licenses as a registered representative with Emerson Equity LLC, member FINRA /SIPC. He has represented buyers and sellers across complex commercial transactions, sourced and structured debt and equity, and worked alongside nationally recognized firms including Marcus Millichap, CBRE, JP Morgan, and Morgan Stanley. Before founding FGG1031, he co-founded Venture Navigation, a boutique investment banking firm whose M&A and IPO activity generated over $700 million in investor returns. Paul holds an MBA in Finance from the University of Michigan and a bachelor’s degree in chemistry from Wayne State University. He has also completed coursework in artificial intelligence at Stanford University. He is the author of four books on real estate investing and tax deferral strategy, including Tax Deferral Strategies Utilizing the Delaware Statutory Trust (DST) and Real Estate Investing in the New Era, both available on Amazon. A frequent speaker on 1031 exchanges, DST investing, and real estate tax strategy, Paul Getty is a recognized voice for investors and advisors seeking guidance on capital preservation through tax-deferred real estate investment. ## Your Comments : This is a search field with an auto-suggest feature attached. - There are no suggestions because the search field is empty. - Latest Posts - Popular Posts [Partial 1031 Exchange: How It Works, What Gets Taxed, and When It May Make Sense](https://blog.fgg1031.com/blog/partial-1031-exchange-how-it-works) [ 1031 Exchange](https://blog.fgg1031.com/blog/topic/1031-exchange) [721 UPREIT Options in DST Programs (Part 3)](https://blog.fgg1031.com/blog/721-upreit-options-in-dst-programs) [ Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [ DST](https://blog.fgg1031.com/blog/topic/dst) [ 721 Exchange](https://blog.fgg1031.com/blog/topic/721-exchange) [ UPREIT](https://blog.fgg1031.com/blog/topic/upreit) [ New featured](https://blog.fgg1031.com/blog/topic/new-featured) [Can a 9% Taxable Return Beat a 4.5% Tax Advantaged DST?](https://blog.fgg1031.com/blog/can-a-9-taxable-return-beat-a-4.5-tax-advantaged-dst) [ Real Estate Investors](https://blog.fgg1031.com/blog/topic/real-estate-investors) [ DST](https://blog.fgg1031.com/blog/topic/dst) [ New featured](https://blog.fgg1031.com/blog/topic/new-featured) ### Categories - [1031 Exchange (143)](https://blog.fgg1031.com/blog/tag/1031-exchange) - [DST (59)](https://blog.fgg1031.com/blog/tag/dst) - [Real Estate Investors (43)](https://blog.fgg1031.com/blog/tag/real-estate-investors) - [Blog (41)](https://blog.fgg1031.com/blog/tag/blog) - [New featured (36)](https://blog.fgg1031.com/blog/tag/new-featured) - [Taxes (18)](https://blog.fgg1031.com/blog/tag/taxes) - [Estate Planning (10)](https://blog.fgg1031.com/blog/tag/estate-planning) - [Investor (8)](https://blog.fgg1031.com/blog/tag/investor) - [REIT (7)](https://blog.fgg1031.com/blog/tag/reit) - [Capital Gains (6)](https://blog.fgg1031.com/blog/tag/capital-gains) - [Qualified Intermediary (6)](https://blog.fgg1031.com/blog/tag/qualified-intermediary) - [721 Exchange (4)](https://blog.fgg1031.com/blog/tag/721-exchange) - [Featured (4)](https://blog.fgg1031.com/blog/tag/featured) - [Opportunity Zones (4)](https://blog.fgg1031.com/blog/tag/opportunity-zones) - [1031 Exchange Funds (3)](https://blog.fgg1031.com/blog/tag/1031-exchange-funds) - [Inflation (3)](https://blog.fgg1031.com/blog/tag/inflation) - [Retirement Planning (3)](https://blog.fgg1031.com/blog/tag/retirement-planning) - [Reverse 1031 Exchange (3)](https://blog.fgg1031.com/blog/tag/reverse-1031-exchange) - [TIC (3)](https://blog.fgg1031.com/blog/tag/tic) - [Apartment Market (2)](https://blog.fgg1031.com/blog/tag/apartment-market) - [Boot (2)](https://blog.fgg1031.com/blog/tag/boot) - [CA Landlords (2)](https://blog.fgg1031.com/blog/tag/ca-landlords) - [Covid-19 (2)](https://blog.fgg1031.com/blog/tag/covid-19) - [Depreciation (2)](https://blog.fgg1031.com/blog/tag/depreciation) - [Depreciation Recapture (2)](https://blog.fgg1031.com/blog/tag/depreciation-recapture) - [IRS (2)](https://blog.fgg1031.com/blog/tag/irs) - [NNN (2)](https://blog.fgg1031.com/blog/tag/nnn) - [UPREIT (2)](https://blog.fgg1031.com/blog/tag/upreit) - [1033 Exchange (1)](https://blog.fgg1031.com/blog/tag/1033-exchange) - [1099A (1)](https://blog.fgg1031.com/blog/tag/1099a) - [AB1771 (1)](https://blog.fgg1031.com/blog/tag/ab1771) - [CPA (1)](https://blog.fgg1031.com/blog/tag/cpa) - [Cost Segregation (1)](https://blog.fgg1031.com/blog/tag/cost-segregation) - [Mortgage (1)](https://blog.fgg1031.com/blog/tag/mortgage) - [PPM (1)](https://blog.fgg1031.com/blog/tag/ppm) - [Rent Relief (1)](https://blog.fgg1031.com/blog/tag/rent-relief) - [Retail (1)](https://blog.fgg1031.com/blog/tag/retail) - [The Tax Cuts and Jobs Act (1)](https://blog.fgg1031.com/blog/tag/the-tax-cuts-and-jobs-act) see all ### Read more of what you like. ## [721 UPREIT Options in DST Programs (Part 3)](https://blog.fgg1031.com/blog/721-upreit-options-in-dst-programs) ## [Can a 9% Taxable Return Beat a 4.5% Tax Advantaged DST?](https://blog.fgg1031.com/blog/can-a-9-taxable-return-beat-a-4.5-tax-advantaged-dst) ## [How to Avoid the Top Five Mistakes Investors Make When Selecting DSTs](https://blog.fgg1031.com/blog/how-to-avoid-the-top-five-mistakes-selecting-dsts) [![FGG_Footer_White](https://blog.fgg1031.com/hs-fs/hubfs/FirstGuardianGroup_2022/FGG_Footer_White.png?width=300&height=95&name=FGG_Footer_White.png "FGG_Footer_White")](http://fgg1031.com) 97 East Brokaw Road, Suite 350, San Jose, CA 95112 [(866) 398 1031](tel:(866)%20398%201031) [info@firstguardiangroup.com](mailto:info@firstguardiangroup.com) ## Recent Blogs - [Investing in Senior Housing October 20, 2022](https://blog.fgg1031.com/blog/investing-in-senior-housing) - [A Closer Look at the 7 Deadly Sins October 20, 2022](https://blog.fgg1031.com/blog/a-closer-look-at-the-seven-deadly-sins) - [What is a Springing LLC? October 20, 2022](https://blog.fgg1031.com/blog/what-is-a-springing-llc) ## Useful Links - Home - About Us - Blogs - Testimonials from Past Customers - Resource Center - Current Offerings Disclaimer: There is no guarantee that any strategy will be successful or achieve investment objectives. All real estate investments have the potential to lose value during the life of the investments. This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please be aware that this material cannot and does not replace the Memorandum and is qualified in its entirety by the Memorandum. This material is not intended as tax or legal advice so please do speak with your attorney and CPA prior to considering an investment. This material contains information that has been obtained from sources believed to be reliable. However, FGG1031, First Guardian Group, LightPath Capital, Inc., and their representatives do not guarantee the accuracy and validity of the information herein. Investors should perform their own investigations before considering any investment. There are material risks associated with investing in real estate, Delaware Statutory Trust (DST) and 1031 Exchange properties. These include, but are not limited to, tenant vacancies, declining market values, potential loss of entire investment principal. Past performance is not a guarantee of future results: potential cash flow, potential returns, and potential appreciation are not guaranteed in any way and adverse tax consequences can take effect.  The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities. All financed real estate investments have a potential for foreclosure. Delaware Statutory Trust (DST) investments are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments. Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions. Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits. IRC Section 1031, IRC Section 1033, and IRC Section 721 are complex tax codes; therefore, you should consult your tax and legal professional for details regarding your situation. DST 1031 properties are only available to accredited investors (generally described as having a net worth of over one million dollars exclusive of primary residence) and accredited entities only (generally described as an entity owned entirely by accredited individuals and/or an entity with gross assets of greater than five million dollars). If you are unsure if you are an accredited investor and/or an accredited entity, please verify with your CPA and Attorney prior to considering an investment. Securities offered through registered representatives of [LightPath Capital, Inc.](http://www.lightpathcapital.com/) Member [FINRA](http://www.finra.org/) / [SIPC](https://www.sipc.org/). FGG1031, First Guardian Group, and LightPath Capital, Inc. are separate entities. Copyright 2022, All Rights Reserved, FGG1031 [![FGG_Footer_White](https://blog.fgg1031.com/hs-fs/hubfs/FirstGuardianGroup_2022/FGG_Footer_White.png?width=300&height=95&name=FGG_Footer_White.png "FGG_Footer_White")](http://fgg1031.com) 97 East Brokaw Road, Suite 350, San Jose, CA 95112 [(866) 398 1031](tel:(866)%20398%201031) [info@firstguardiangroup.com](mailto:) [![Bitmap](https://blog.fgg1031.com/hubfs/FirstGuardianGroup_2023/Bitmap.png)](https://brokercheck.finra.org/individual/summary/6470002) ## Recent Blogs - [Understanding the Difference Between Inheritance and Estate Tax August 3, 2023](https://blog.fgg1031.com/blog/understanding-the-difference-between-inheritance-and-estate-tax) - [Public or Private Real Estate? Your Investment Portfolio May Need Both July 27, 2023](https://blog.fgg1031.com/blog/public-or-private-real-estate-your-investment-portfolio-may-need-both) - [How to Use 1031 Exchange Funds to Improve Your Replacement Property July 20, 2023](https://blog.fgg1031.com/blog/how-to-use-1031-exchange-finds-to-improve-your-replacement-property) ## Useful Links - [Home](http://fgg1031.com/) - [About Us](https://fgg1031.com/about-us/) - [Blogs](https://blog.fgg1031.com/blog) - Testimonials from Past Customers - [Resource Center](https://fgg1031.com/resource-center/) - [Current Offerings](https://fgg1031.com/property-listings-directory/) FGG1031 | First Guardian Group and Emerson Equity LLC do not provide legal or tax advice. Securities offered through [Emerson Equity LLC](http://www.emersonequity.com/) Member [FINRA/SIPC](http://finra.org/) and MSRB registered. Emerson Equity LLC is unaffiliated with any entity herein. 1031 Risk Disclosure: - There is no guarantee that any strategy will be successful or achieve investment objectives; - Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments; - Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities; - Potential for foreclosure – All financed real estate investments have potential for foreclosure; ·Illiquidity – Because 1031 exchanges are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments; - Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash flow distributions; - Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefits No offer to buy or sell securities is being made. Such offers may only be made to qualified accredited investors via private placement memorandum. Risks detailed in a private placement memorandum should be carefully reviewed, understood and considered before making such an investment. Prospective strategies and products used in any tax advantaged investment planning should be reviewed independently with your tax and legal advisors. Changes to the tax code and other regulatory revisions could have a negative impact upon strategies developed and recommendations made. Past performance and/or forward looking statements are never an assurance of future results. Many of the investments offered will be only available to those investors meeting the definition of an Accredited Investor under SEC Rule 501(A) and offered as Regulation D private placement securities via a Private Placement Memorandum (“PPM”). Prospective investors must receive, read and understand all of the risks associated with buying private placement securities. Investments are not guaranteed or [FDIC](http://fdic.org/) insured and risks may include but are not limited to illiquidity, no guarantee of income or guarantee that all tax advantages or objectives will be met and complete loss of principal investment could occur. **Risk Disclosure:** Alternative investment products, including real estate investments, notes & debentures, hedge funds and private equity, involve a high degree of risk, often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products often execute a substantial portion of their trades on non-U.S. exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in U.S. markets. Additionally, alternative investments often entail commodity trading, which involves substantial risk of loss. NO OFFER OR SOLICITATION: The contents of this website: (i) do not constitute an offer of securities or a solicitation of an offer to buy of securities, and (ii) may not be relied upon in making an investment decision related to any investment offering by FGG1031 | First Guardian Group, Emerson Equity LLC, or any affiliate, or partner thereof. FGG1031 | First Guardian Group does not warrant the accuracy or completeness of the information contained herein. Copyright 2026, All Rights Reserved, FGG1031