DST vs TIC vs NNN Comparison

Compare Delaware Statutory Trusts, Tenancy-in-Common, and Triple Net Lease properties for your 1031 exchange.

DST vs TIC vs NNN: Passive 1031 Options Compared

Compare three passive replacement property options for your 1031 exchange. This comprehensive comparison helps you understand the critical differences between Delaware Statutory Trusts (DST), Tenant-in-Common (TIC) arrangements, and Triple Net Lease (NNN) properties to identify which structure best aligns with your investment goals.

Filter Options

DST

Delaware Statutory Trust

Best For:Hands-off investors
Min Investment:$25k-$100k
Control Level:None
1031 Compatible:Yes (limited)
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TIC

Tenant-in-Common

Best For:Investors wanting voice
Min Investment:$100k-$1M+
Control Level:Shared decisions
1031 Compatible:Yes (full)
Learn More

NNN

Triple Net Lease

Best For:Direct ownership
Min Investment:$500k-$2M+
Control Level:Full ownership
1031 Compatible:Yes (full)
Learn More

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Detailed Comparison

Comparison Criteria
DST
TIC
NNN

Ownership Structure & Legal Rights

Type of ownership and legal rights

Beneficial interest in trust (passive)

Direct fractional ownership (co-ownership)

Full direct ownership (fee simple or entity-held)

Management Responsibilities

Level of management involvement required

Zero management required (fully passive)

Limited management (sponsor-led with voting rights)

Hire property management; maintain oversight

Minimum Investment Amount

Typical minimum investment required

$25,000 - $100,000 typical minimum

$100,000 - $1,000,000+ typical minimum

$500,000 - $2,000,000+ for quality properties

Number of Investors Allowed

Maximum number of co-investors

Unlimited investors permitted

Maximum 35 investors (IRS limit)

Single investor (or entity members)

Financing Options & Complexity

How financing works and complexity level

Non-recourse pre-arranged (no personal qualification)

Individual or group financing (qualification required)

Traditional commercial financing (full underwriting)

Control Over Property Decisions

Level of decision-making control

No control (IRS restrictions prohibit input)

Voting rights on major decisions per operating agreement

Complete control over all decisions

Exit Strategies & Liquidity

Options and timing for exiting investment

Hold until sponsor liquidation (typically 5-10 years)

Consensus-based sale (can be complex)

Sell at owner's discretion (maximum flexibility)

1031 Exchange Compatibility

Ability to do future 1031 exchanges

Limited future exchange ability (Rev Proc 2004-86)

Full 1031 exchange capability (no restrictions)

Full 1031 exchange capability (no restrictions)

Liability Exposure

Level of personal liability risk

Limited to investment amount (passive liability)

Proportionate liability exposure (co-owner risk)

Full property liability (mitigated by insurance/entities)

Typical Investor Profile

Best suited for which type of investor

Smaller exchanges, passive preference, estate planning

Mid-size exchanges, some involvement desired

Large exchanges, experienced investors, control-oriented

Pros & Cons

DST

Advantages

  • •Lowest minimum investment: $25k-$100k - accessible for smaller exchanges
  • •Zero management required: Completely passive, ideal for "landlord retirement"
  • •No personal liability: Limited to investment amount, no debt guarantees
  • •Access to institutional-quality assets: Properties typically $20M-$100M+ that individuals couldn't purchase alone
  • •Diversification ability: Can invest in multiple DSTs across property types and locations
  • •No loan qualification needed: Pre-arranged non-recourse financing
  • •Professional management guaranteed: Experienced sponsors with track records

Disadvantages

  • •No control over decisions: IRS rules prohibit any investor input
  • •Limited future 1031 flexibility: Cannot exchange directly from DST to DST
  • •Illiquid until sponsor liquidates: Typically 5-10 year hold, no early exit
  • •Cannot change sponsors/managers: Locked into initial team
  • •Potentially higher fees: Sponsor acquisition fees, asset management fees
  • •No ability to influence exit timing: Must wait for sponsor's sale decision
  • •Higher financing costs: Non-recourse loans typically have higher rates

TIC

Advantages

  • •Voting rights on major decisions: Voice in property sale, refinancing, major capex
  • •Full future 1031 exchange flexibility: No IRS restrictions on next exchange
  • •Direct fractional ownership: Legal title to property, true co-ownership
  • •Can replace sponsor/manager: If majority agrees, not locked into initial team
  • •Access to institutional properties: Typically $10M-$50M+ assets
  • •More control than DST: Balance of passivity and involvement
  • •Individual 1031 exchange ability: Each co-owner can exchange independently at sale

Disadvantages

  • •Higher minimum investment: Typically $100k-$1M+, less accessible
  • •Maximum 35 investors: Limits availability, high minimums result
  • •Consensus required for exits: Can be difficult to achieve agreement on sale timing
  • •Co-investor risk: Difficult co-owners can complicate decisions
  • •More complex financing: May require personal qualifications/guarantees
  • •Greater liability exposure: Co-ownership brings proportionate liability
  • •More involvement required: Meetings, votes, decision-making participation needed

NNN

Advantages

  • •Complete control: All decisions (sale, management, improvements) owner's choice
  • •Flexible exit strategy: Sell when you want (subject to lease terms)
  • •Full 1031 exchange flexibility: Can exchange into any qualifying property
  • •Direct ownership: No co-investors, no consensus needed
  • •Ability to optimize financing: Choose lender, terms, rates
  • •Can improve property value: Make strategic improvements to increase returns
  • •Potential for higher returns: No sponsor fees, direct value capture

Disadvantages

  • •High capital requirement: Typically $500k-$2M+ for quality properties
  • •Active involvement needed: Even with property manager, oversight required
  • •Full liability exposure: Personal or entity liability for all property issues
  • •Financing complexity: Full underwriting, personal guarantees often required
  • •Individual due diligence burden: Must evaluate market, property, tenant independently
  • •Tenant concentration risk: Single tenant vacating creates 100% vacancy
  • •Re-tenanting risk: At lease expiration, may need major work to attract new tenant

Common Misconceptions

DST Misconceptions

TIC Misconceptions

NNN Misconceptions

Key Questions to Ask Sponsors/Sellers

Additional Resources to Review

Now that you understand DST, TIC, and NNN options, explore these tools to make your decision:

DST vs Direct Property Comparison

Compare passive DST investment to active ownership

DST Due Diligence Checklist

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Investor Profile Quiz

Discover your ideal investment management style

Capital Gains Tax Calculator

Calculate tax savings from your 1031 exchange

Find a Qualified Intermediary

Connect with QIs experienced in passive investments