A Fully Managed DST or an NNN Property – Which Suits You the Best?

Our clients continuously inquire whether their property passes for a 1031 Exchange. Section 1031 promotes the exchange of like-kind property. For a successful 1031 property exchange, like-kind applies to any property that is being used for business or investment purposes. Land or commercial property, such as an office building or a retail space is always a great form of investment which will not be questioned by the IRS. For more natural understanding, one can check whether a property they are selling and the property they are buying is income producing or not.

Any property purchased or sold with the purpose of a “fix and flip,” are not suitable for a 1031 exchange. These properties typically show a short-term gain and are not considered income producing if not rented out.

Like-Kind Property

Replacement property acquired in a 1031 tax-deferred exchange must be “like-kind” to the real estate being sold. Like-kind means “similar in nature or character, notwithstanding variations in grade or quality. For the properties to pass as “like-kind” they must be maintained for productive use in a trade or business or operated for investment purposes.

The below-mentioned properties are the ones which are considered highly suitable for a 1031 Exchange.


Single Family includes condominiums, town homes, houses, coops and the like. They are estimated dwelling units that lend themselves to personal use. To adhere to 1031 exchange guidelines, you must register rental activity and hold this property for a minimum year or two to suit as an investment.


Multi-Family residential properties such as apartment complexes are highly popular among investors, including real estate holding companies, pension funds, partnerships, and joint ventures. Handled efficiently, they have engaging cash flow and potential for appreciation in the long term.


Commercial office buildings are for the experts in the real estate industry. Changes in the economy, insurance, and legal challenges, zoning changes, property management efficiency, air rights, and more come full force. Experience coupled with the ability to hold for the long run bears fruit typically for the astute commercial office property investor.


Warehouses are sought-after 1031 exchange properties for the investor scanning for single user creditworthy tenants.


Single and Multi-Tenant Retail can be critical investments in down economic environments or if the tenant has a dying product line. Due diligence of marketing data such as valid traffic counts, steady franchise sales, and competitor analysis to recommend such a purchase is highly advisable.


Marinas are specialty commercial assets that work well in tourism, cargo shipping, and fishing environments. Deed restrictions occur due to government leases in place that are term specific.


Self-storage facilities have grown significantly as substantial investments in recent years for 1031 exchanges. If handled well, these properties could render attractive cash flow with great potential for appreciation and minimal property administration.


Oil and gas properties are considered risky investments for apparent reasons. Although highly speculative, their returns can be handsome if a well hits oil or gas reserves. Those who promote these investments structure them in sophisticated lease arrangements to suit for 1031 exchanges.


Hotels are most likely privately held investments that have different accounting standards. Opportunities exist in emerging markets sought by 1031 investors, as first market hotel properties require longer-term holding periods to justify current asking prices.


NNN properties are an appealing option for investors seeking steady returns with minimal management responsibilities but are not immune from risk.

What is a DST?

DSTs are the first preference when it comes to identifying a suitable replacement property for a profitable 1031 Exchange. It offers all the unique benefits an investor is looking for.

1031 Eligible: As per Section 1031 of the IRS tax code, DST properties are treated as direct ownership of real estate. Hence, DST investment is eligible for 1031 exchanges both at the time of investment and liquidation.

Timing: Adhering to the timelines dictated by IRS is essential for a successful 1031 Exchange. DST properties are pre-packaged and are readily available. DSTs save a lot of time and minimize hassle for Investors looking for a suitable replacement property for a 1031 Exchange.

Management Free Ownership: Say good-bye to all the responsibilities which come attached with being a landlord. DST properties allow you ownership; however, you are exempted from rent collection, leasing, maintenance, repairs, and bookkeeping.

Engage our services for a profitable 1031 Exchange and defer Taxes

Our 1031 Experts will ensure that you find a suitable property as per your requirements and you successfully complete a profitable exchange.

For consultation and assistance regarding 1031 exchange call – 888-993-2835 or email us at info@1031Xchange.com

“Our tax-deferred 1031 exchange programs can save millions in taxes, increase investor equity, and compound annual cash flow distributions and returns”