Our Insights

Delaware Statutory Trusts are often discussed as a way for real estate investors to transition from actively managed property into professionally managed real estate, but the benefits are only half of the conversation. Investors considering DSTs should also understand what can go wrong. Potential risks include limited liquidity, reduced investor control, sponsor performance, tenant problems, financing risk, property-market changes and multiple layers of fees. Those issues should not be

For many longtime rental property owners, the question eventually changes. It is no longer simply, “Should I sell?” Instead, it becomes: How can I transition out of active property management without immediately giving up my real estate investment strategy? That question is especially relevant for California landlords who may have accumulated significant equity while also dealing with tenant issues, maintenance responsibilities, vacancies, capital improvements and the day-to-day demands of

A replacement property falling through does not automatically end a 1031 exchange, but what happens next depends heavily on when the deal fails. If the investor is still within the 45-day identification period, there may be time to revise the identification and pursue another qualifying property. After Day 45, the options become much narrower because the investor generally must acquire property that was properly identified before the deadline. If

Yes, an investor may be able to complete a 1031 exchange into a qualifying Delaware Statutory Trust, commonly called a DST. When properly structured, the investor acquires a fractional beneficial interest in the real estate owned by the trust, and that interest may be treated as ownership of real property for federal tax purposes. This can allow an investor to sell an eligible investment property, reinvest the proceeds into

Selling an investment property through a 1031 exchange can allow an investor to defer capital gains taxes, but the transaction must be completed within a strict IRS timeline. Missing a deadline by even one day may disqualify the exchange and make the gain from the sale immediately taxable. For most investors, the two most important requirements are the 45-day deadline for identifying potential replacement property and the 180-day deadline

I sell DST investments for a living. When an investor completes a 1031 exchange into a Delaware Statutory Trust through our firm, I earn a commission. So understand what it means when I tell you this: most investors who buy a DST have no real idea what they paid for it. That is not because anyone hid the numbers. Every fee is disclosed in the private placement memorandum —

“Our favorite holding period is forever.” — Warren Buffett The Case for Patience Since the 1970s, California real estate has delivered extraordinary appreciation over the long run — through recessions, shifting regulations, rising costs, and demographic change. There have been plenty of cycles when patient owners questioned whether it was still worth it. I’ve had those thoughts myself, and I’ve made the mistake of selling. But well-located California property

One of the most common questions investors ask before selling an investment property is simple: how much does a 1031 exchange cost? The answer depends on the type of exchange, the complexity of the transaction and the replacement property strategy being used. A straightforward delayed exchange may cost less than $2,000 in Qualified Intermediary fees, while complex reverse exchanges, improvement exchanges and certain DST investments can involve substantially higher

Yes, an LLC or partnership can complete a 1031 exchange, but ownership structure is one of the most misunderstood and potentially problematic areas of Section 1031. Many investors assume that if a property is owned by an LLC, completing a 1031 exchange is straightforward. In some cases, that is true. In others, ownership structure can create significant challenges that jeopardize tax deferral entirely. The key issue is that the

A 1031 exchange allows real estate investors to sell a rental property and defer capital gains taxes by reinvesting the proceeds into another qualifying investment property. For many investors, it is one of the most powerful long-term wealth preservation strategies available under the tax code. Instead of losing a portion of sale proceeds to federal taxes, state taxes and depreciation recapture, investors can reinvest their equity into replacement property