“The offerings we decline never make it into a brochure, but they’re the most important work we do. Every deal we turn down is a client who never had to find out the hard way that a structure was broken.” — Daniel Raupp, Founder & Managing Partner, Fortitude Investment Group LLC
Quick answer: The best DST marketplace is not the one with the most listings. It is the one with the strictest rejection process. Before any Delaware Statutory Trust reaches the Fortitude Investment Group platform, it is reviewed against IRS Revenue Ruling 2004-86, screened by independent tax attorneys, and tested against the structural failures that have cost investors their tax deferral. Many offerings do not make it through.
Every DST platform advertises what it offers. Almost none discuss what they decline. That silence matters, because a 1031 exchange investor is not just buying real estate. They are buying a legal structure, and a single structural defect can recharacterize the entire trust and trigger the very tax bill the exchange was meant to defer, for every investor in it.
Since 2006, our firm has reviewed offerings across more than 1,000 completed exchanges and approximately $1.7 billion in assets under advisement. The lesson of twenty years is simple: the deals you avoid protect clients more than the deals you select.
Recently our compliance review declined a nine-figure logistics DST that looked impressive on paper. Underneath, we identified multiple disqualifying issues, including leverage above 85 percent loan to value, a structure paying investors zero cash flow for twenty years, a conditional tax opinion tied to ongoing construction, an untested four-tier trust structure, and a Transfer Distribution provision that would have extinguished investors' future 1031 exchange rights entirely. Our independent tax counsel confirmed the concerns. We did not approve it. No listing fee or commission is worth a client's deferral.
Before registering with any platform, ask three questions. First, who reviews offerings, and are they independent of the sponsor? Second, has the firm ever rejected an offering, and can they explain why? Third, does the review specifically test the Seven Deadly Sins under Rev. Rul. 2004-86, the seven prohibited actions that can disqualify a DST from like-kind treatment?
A marketplace that cannot answer those questions clearly is a listing service, not an advisor.
Inventory is easy. Discipline is rare. If you are an accredited investor comparing DST marketplaces for an upcoming 1031 exchange, judge each platform by its rejection standards, not its brochure. To see how a rejection-first review process works, and to explore offerings that have passed it, visit www.1031dst.com or speak with our team directly.
Securities offered through Concorde Investment Services, LLC (CIS), member FINRA/SIPC. Advisory services offered through Concorde Asset Management, LLC (CAM), an SEC registered investment adviser. Fortitude Investment Group is independent of CIS and CAM.
This material is for informational purposes only and is not an offer to buy or sell any security or investment product. DST investments are available to accredited investors only and involve substantial risk, including illiquidity and potential loss of principal. Past performance does not guarantee future results. All investments involve risk, including possible loss of principal. Consult your tax, legal, and financial advisors before making investment decisions.