Hi, I’m Jerry Baker. I’m the founder of Baker 1031 Investments, a real estate securities brokerage specializing in helping individual investors explore institutional investments for their 1031 exchanges. Over more than a decade in the industry, I’ve had the opportunity to participate in over $10 billion in real estate investment activity. Through a combination of education, investment guidance, and transactions, I’ve reached more than 250,000 real estate investors.
After years of working for some of the largest real estate private equity firms, I helped my own family with our real estate investments and the eventual sale of several properties. During this process, we explored and ultimately invested in DST properties.
If you can’t tell from the look of my website, I do things a little differently than other firms in the industry. Don’t worry—it’s by design. During our own process of exploring DST opportunities, I saw firsthand how a crowdfunding or menu approach can leave investors with little to no guidance and a large investment decision to make on their own. This wasn’t what I needed, and I imagine other investors need a higher level of service, too.
So I built the kind of firm I would have wanted for my own family. Every investor works directly with me. There’s no large call center with layers of salespeople. My team works behind the scenes, helping me with internal processes, so I can focus on working with you. You’re not passed around between salespeople and assistants—you have direct access to me.
The programs shown here have gone full cycle and are no longer available for investment. Past performance does not guarantee future results.
The institutional sponsors and firms whose programs I review and place for clients include:
Logos used with permission of the firm. Logos are owned by their respective firms. No affiliation or recommendation should be inferred from the logos shown. Not all firms listed have available opportunities. Not all opportunities from these firms are offered by Baker 1031 Investments.
What do I do?
I help accredited real estate investors complete their 1031 exchanges by putting together custom solutions from the institutional investment offerings available to me.
It starts with a conversation. I want to understand your background, what you need from your investments, and what you’re trying to accomplish. From there, we work through the options that fit your circumstances and exchange requirements.
For a 1031 exchange, those options may include Delaware statutory trust (DST) properties, DST offerings structured for a potential future 721 (UPREIT) exchange, and qualifying oil and gas royalty interests. I also work with Opportunity Zone (OZ) funds and REITs for investment needs outside a direct 1031 exchange.
I’m often asked, “How do you decide which investments are right for me?” My starting point is a simple formula:
Needs+
Goals+
1031=
Your Ideal Solution
Needs
What do you need today, tomorrow, and over the next five to ten years?
This helps us understand your cash flow needs and when you may need access to your money.
Goals
What are you trying to accomplish over the next 10, 20, or 30 years?
This is where we look at the bigger picture.
1031 Requirements
What are the requirements of your exchange?
We look at how much you need to reinvest, how to address debt from the property you’re selling, and the deadlines and other requirements we need to work within.
What investment types do I offer?
Here’s what I work with and how each option works. I want you to understand what you’re buying, where the income comes from, how long your money may be tied up, and what happens when you’re ready to move on.
I know about
1031 Exchanges
1031 Exchanges
A 1031 exchange lets you sell investment or business real estate, purchase qualifying replacement real estate, and defer tax on eligible gain. You can buy another property to manage yourself, spread the exchange across several properties, or use a qualifying investment such as a DST.
In a typical deferred exchange, the sale proceeds go through a qualified intermediary. You don’t take possession of the money yourself. You generally have 45 days to identify replacement property and must complete the purchase within 180 days—or your tax return’s due date, including extensions, if earlier.
I help you work through what to buy, how much you need to reinvest, and how to account for debt being paid off on the property you’re selling. That doesn’t always mean taking on an identical new loan; additional cash can sometimes address the difference.
Once the exchange is complete, the property or investment you selected determines your income, management responsibilities, and holding period. When you eventually sell, you may be able to complete another qualifying exchange and continue deferring eligible gain, or take the proceeds and recognize the applicable taxes.
Some investors might avoid a 1031 exchange if:
You’re working against a clock, and the tax benefit doesn’t make an investment worth buying. Some investors would rather pay the tax and take their time deciding what to do next.
Key Features
Defer eligible taxesKeep more capital invested by postponing tax on qualifying gain.
Change what you ownMove between qualifying property types, markets, and ownership structures.
Work within defined rulesThe deadlines, reinvestment amounts, and handling of your money all need attention.
Who uses this?
Property owners use 1031 exchanges when they’re ready to sell but want to remain invested in real estate. That might mean buying in a different market, changing property types, or stepping away from managing properties themselves.
With a DST, you purchase a beneficial interest in a trust that owns real estate. The trust might own one apartment community, an industrial building, or several properties. You own a proportional interest through the trust, rather than a particular apartment or a separately deeded piece of the building.
The trust holds legal title to the property. For federal income tax purposes, a properly structured DST generally treats you as owning your share of the underlying real estate, which is why a qualifying DST interest can work in a 1031 exchange.
You don’t manage the property. The sponsor and property manager handle the operations, and the sponsor generally decides when to sell. Your involvement is as an investor, with limited control over those decisions.
The investment generally seeks to provide cash flow during the holding period and appreciation when the property is sold. Rental income has to cover property expenses, debt payments, reserves, and fees before it can support distributions to investors. If the property increases in value, you may also share in the gain at sale, after debt and selling costs are paid; if it loses value, your investment can lose value too.
A sponsor may plan to hold a property for roughly five to ten years. Treat that as a plan, not a promised exit date: market conditions and the property’s performance can change the timing, and selling your interest early may be difficult.
When a traditional DST property sells, you can generally choose between receiving your share of the net proceeds and paying any applicable taxes, or arranging another qualifying 1031 exchange. That next investment could be another DST or other qualifying real estate, including a property you manage yourself. The exchange needs to be coordinated before the proceeds are paid to you. A conversion into UPREIT units works differently, as explained below.
Some investors might avoid a DST if:
Handing off management also means handing off control, and you generally can’t decide when the property gets sold. If you need easy access to your money or want to make the property decisions yourself, a DST may not be a fit.
Key Features
Own a share of real estateParticipate in properties that might be difficult to purchase entirely on your own.
Have the management handled for youThe sponsor’s team runs the property while you participate in its financial results.
Keep a possible 1031 path openA qualifying purchase and later property sale may allow you to continue exchanging.
Who uses this?
DSTs may appeal to accredited investors who want to keep owning real estate without continuing to be the landlord. They need to be comfortable committing money for years and accepting that both distributions and the value of their investment can change.
An Opportunity Zone fund, formally a Qualified Opportunity Fund, invests in qualifying real estate or businesses in designated communities. You own an interest in the fund, and its managers decide which investments to make and how to operate them.
Investors generally contribute eligible capital gains within 180 days to pursue the available tax benefits. Those gains can come from real estate, securities, or other eligible transactions. Unlike a 1031 exchange, you generally don’t have to reinvest the entire sale proceeds to receive benefits on the qualifying gain you invest.
The fund may seek to make money through operating income, growth in the value of its investments, or both. If it’s building and leasing new properties, you may receive little or no income during those early years. I want you to understand where the return is supposed to come from and how much has to happen before the fund can pay you.
The potential appreciation benefit generally requires at least a ten-year holding period. But reaching year ten doesn’t mean the fund must return your money: its documents determine its expected life and exit options, and tax on your original gain may come due while you’re still invested. Eventually, money may be returned through distributions, asset sales, or a permitted redemption, depending on the fund.
Some investors might avoid an Opportunity Zone fund if:
Ten years is a long commitment, and the tax bill on your original gain may arrive before the fund returns your money. If you need earlier access to your capital or don’t want the development, business, and tax complexity involved, the benefits may not be worth it to you.
Key Features
Invest eligible gainsYou generally don’t need to contribute the entire sale proceeds.
Defer the original gain temporarilyUnder the existing rules, deferral generally ends no later than December 31, 2026. Qualifying investments made beginning in 2027 generally receive a five-year deferral, subject to earlier taxable events.
Pursue a long-term appreciation benefitAfter at least ten years, qualifying appreciation in the fund investment may be excluded from federal capital gains tax, subject to the applicable requirements.
Who uses this?
These funds may appeal to investors with eligible gains who can leave that capital invested for a long time. They can be harder to fit into a plan that depends on receiving income right away.
These are DST investments with a possible next step: becoming an owner in a REIT’s operating partnership. You begin with a DST interest that may qualify for your 1031 exchange and participate in the income and changes in value of the original DST property.
Later, under the offering’s terms, the DST property or interests may be contributed to the operating partnership in exchange for operating partnership units through a separate Section 721 transaction. At that point, you own partnership units tied to the broader portfolio. You don’t automatically own publicly traded REIT shares.
The appeal is the opportunity to move from a particular DST property into a larger real estate portfolio, with distributions and changes in unit value tied to that portfolio’s results. The income can change after conversion, so I want you to understand the investment you’re moving into as well as the DST you started with.
The conversion terms deserve a close look. Some programs offer investors a choice; others give the sponsor the right to require conversion. The offering sets the initial holding period and conversion windows, and the partnership may continue indefinitely afterward.
You may eventually be able to request redemption of your units, subject to the program’s restrictions and available liquidity. A redemption may be paid in cash or REIT shares and can trigger taxable gain. Once you hold operating partnership units, those units generally cannot be used in another 1031 exchange.
Some investors might avoid a 721 Exchange (UPREIT) DST if:
You generally give up the ability to keep exchanging once you own the partnership units, and you may still have restrictions on getting your money out. If keeping that flexibility or controlling the conversion is important to you, some of these offerings simply won’t fit.
Key Features
A DST first, partnership units laterThe initial 1031 exchange and later Section 721 contribution are separate transactions.
Access to a broader portfolioYour investment may become tied to a larger collection of properties.
New rules for getting outConversion changes your redemption rights and future 1031 options.
Who uses this?
This may appeal to investors who want a path from individual property ownership into a larger real estate portfolio they can hold over time. They need to be comfortable with the conversion terms, limited liquidity, and giving up future 1031 flexibility on the partnership units.
Oil and gas royalties give you a right to a share of production or production revenue from specified mineral interests. You might own a direct, fractional mineral or royalty interest, or an interest in a vehicle that owns those assets. If you’re investing through a 1031 exchange, that distinction matters.
You aren’t the operator. The operator handles drilling and production, while royalty owners generally do not pay those drilling and production costs. Taxes and other deductions may still apply under the lease and ownership terms.
Your payments depend on how much is produced, what it sells for, and the rights you own. Income may continue for years, but it isn’t a fixed payment schedule. Existing wells generally produce less over time, while additional drilling and changing commodity prices can affect both the income and the value of your interest.
There also isn’t one standard holding period. Some interests can be held for an extended or indefinite period; others end under the terms of a lease, contract, or investment program. You generally get out by selling your interest or participating in a sale under the offering’s terms, rather than waiting for a promised date when your original investment is returned.
Some investors might avoid oil and gas royalties if:
The checks can get smaller when prices fall or wells produce less, and both can happen at the same time. If you depend on steady payments or don’t want your income tied so closely to commodity prices and well performance, this may not be for you.
Key Features
Income from productionPayments depend on commodity prices, production, and your ownership terms.
No day-to-day operating roleYou participate in the revenue without running the wells.
Possible 1031 eligibilityCertain directly owned mineral and royalty interests can qualify, depending on their structure and the applicable tax rules.
Who uses this?
These investments may appeal to investors who want income from producing mineral assets and can tolerate changes in commodity prices and production. Qualifying interests may also be considered by 1031 investors when the ownership structure and risks fit their circumstances.
With a REIT, you buy shares in a company that owns or finances real estate. You have an interest in the company and its portfolio, rather than direct ownership of a particular building.
The management team chooses investments, arranges financing, oversees operations, and decides when to buy or sell assets. Some REITs own buildings and collect rent; others own mortgages or other real estate loans and collect interest. Your return generally comes from distributions and changes in the value of your shares.
REITs generally must distribute at least 90% of their taxable income, subject to the applicable rules. That requirement doesn’t tell you what dividend you’ll receive or what return you’ll earn. Taxable income, cash flow, and the amount distributed to shareholders are different things.
One of the first things I want to establish is how you can get your money out. Publicly traded REIT shares can generally be sold on an exchange at the market price. Non-traded and private REITs may require you to rely on restricted redemption programs, a future sale, or another event that provides an exit; they don’t all have a set maturity date.
Selling or redeeming shares can create a taxable gain or loss. Direct purchases of REIT shares also don’t qualify as 1031 replacement property, so their role is different from a qualifying DST.
Some investors might avoid a REIT if:
Publicly traded REITs can swing with the stock market, while non-traded and private REITs may limit withdrawals and carry substantial fees. Dividends can also be reduced, so you need to be comfortable with the business and its exit rules, not just the advertised distribution.
Key Features
Ownership through company sharesParticipate in a portfolio without buying and managing individual properties.
Income and changes in share valueDistributions and appreciation may contribute to returns, but neither is guaranteed.
Different ways to sellPublicly traded, non-traded, and private REITs have very different exit rules.
Who uses this?
REITs may appeal to investors who want real estate exposure with the management handled for them. The appropriate type depends on their income needs, investment goals, and how much access they need to their money.
Credit means lending. You may own a loan, a participation in a loan, or an interest in a fund that lends to businesses or real estate borrowers.
If you invest directly in a loan, the loan documents set out your rights. If you invest through a fund, its manager chooses the loans, monitors the borrowers, handles problems, and decides whether to reinvest money as loans are repaid. You own part of the fund rather than making each lending decision yourself.
Most of the return generally comes from interest, although some strategies also earn fees or gains on loans purchased below their repayment value. I want to understand who owes the money, where repayment is supposed to come from, what collateral supports the loan, and what happens if the borrower’s plan doesn’t work. A higher interest rate doesn’t answer those questions.
The borrower may have a repayment date, but that doesn’t necessarily give you a withdrawal date. A three-year loan inside a fund does not mean you can take your money out of the fund in three years: the manager may reinvest the repayment, and the fund may have separate withdrawal restrictions.
Depending on the investment, your money may come back through loan repayment, a sale, fund distributions, or a permitted redemption. These investments generally sit outside the direct 1031 replacement-property options.
Some investors might avoid a credit investment if:
Your upside is usually tied to the agreed payments, but your downside can include lost principal—even when the loan is secured. Some investors would rather pursue more growth, while others aren’t comfortable with the borrower risk or the withdrawal restrictions of private funds.
Key Features
Income from lendingReturns depend primarily on borrowers making their agreed payments.
Defined lender rightsCollateral, loan terms, and repayment priority help determine what happens if a borrower defaults.
Different holding periodsThe life of the loans and the length of your investment may not be the same.
Who uses this?
Credit may appeal to investors looking for income who are comfortable taking lending risk. The specific investment needs to fit both their tolerance for losses and the dates when they may need their money.
Every investment opportunity on my platform goes through a thorough due diligence process. Some clients have described my process as obsessive, maniacal, crazy, and unrealistic. That’s exactly how I want it.
I call it “The Gauntlet.” Only about 8.9% of available investments make it in front of my clients. If you’re looking for the widest variety of opportunities, I’m not your guy. Quality over quantity.
1
The Sponsor Review
The investment manager, often called the sponsor, is the firm responsible for putting together and managing the investment offering. They’re the ones making the decisions and carrying out the business plan, so our review starts with them.
We enlist the help of third-party firms such as FactRight, Mick Law, and Bowman to examine the sponsor’s team, experience, financial stability, and ability to stay in business throughout the life of the investment. We also review succession planning, operating procedures, past and ongoing litigation, team member backgrounds, and the sponsor’s track record.
I want to understand who we’re trusting with your money and whether they have the experience and resources to do what they say they’ll do.
2
The Structure Review
Even excellent investment managers occasionally put together less-than-appetizing investment opportunities. A good sponsor doesn’t give every offering a free pass.
With help from third-party due diligence firms, we examine the investment’s strategy, objectives, targeted performance, asset management plan, and exit strategy. We also review market conditions, underwriting assumptions, and the offering’s particular risks and potential advantages.
The projections might look good. I want to understand what has to happen for those numbers to become reality—and what could get in the way.
3
The Overall Review
Very few investments make it through our sponsor and structure reviews. Those that do still have one more round to go.
I work with our in-house due diligence team to reassess the investment from the ground up. We start with the underlying real estate and whether the business plan makes sense for those properties. Then we work through the offering’s terms, fees, and expenses to understand what they mean for investors.
At the end of this process, we’re left with the investments I’m comfortable putting in front of my clients. That doesn’t mean every investment belongs in your portfolio. We still need to determine whether it fits your needs, goals, and circumstances.
How do I develop your custom 1031 exchange solution?
With a pencil, some paper, and a fresh cup of coffee, I begin by reviewing your 1031 exchange requirements. I start with three numbers: your equity, your debt, and your total investment.
Yes, even though you paid off the loan at closing, that portion of the property’s value still matters. To fully defer your gain, you generally need to reinvest your exchange proceeds and replace the debt with new debt, additional money of your own, or a combination of the two. Paying off the mortgage doesn’t make that part of the exchange disappear.
Equity
The net proceeds your qualified intermediary holds from the sale of your property.
Debt
The loan balance paid off at closing.
Total investment
The value of the replacement property—or properties—you need to acquire to fully defer your gain. Your equity and debt give us a starting point, with allowable exchange expenses and other closing adjustments factored into the final calculation.
Once I have those figures, I can narrow down the investments to those that can meet your exchange requirements.
Next, I compare the available investments against your goals and needs. Maybe income is your priority. Maybe you’re looking for a combination of income, long-term growth, and estate-planning flexibility. Those priorities help determine which investments I consider and how much of your equity I would allocate to each.
One of the things I find most interesting about these investments is how they can work together. Selling one property doesn’t mean you have to replace it with just one investment. You can divide your exchange among multiple qualifying DSTs, provided you follow the identification rules and exchange deadlines.
That gives me room to build a solution around you. One investment might focus more on current income, while another places more emphasis on long-term growth. Each has its own features, risks, and tradeoffs. My job is to understand how they fit together and whether the combination makes sense for what you’re trying to accomplish.
Ideally, I can put several options in front of you and walk you through what I like about each, where I have reservations, and how each would fit your needs.
I don’t love talking about myself, but I’ll give it my best go.
I grew up in an entrepreneurial family in Birmingham, Michigan, a small town north of Detroit. I attended Babson College in Wellesley, Massachusetts, where I studied how to apply mathematics and statistics to finance.
After college, I had the opportunity to work at ValueRock Realty Partners, Faris Lee Investments, Westport Capital Partners, and Arbor Bay Capital Partners. Those experiences gave me the chance to learn the acquisition, management, and development sides of the real estate business.
During that time, I was involved in more than $10 billion in real estate investment activity. That included various roles in the redevelopment of a mall in Orange County, California, and the development of an animal processing facility for John F. Kennedy International Airport in New York.
I also worked on the SkyBridge Opportunity Zone REIT through Westport Capital Partners’ partnership with Anthony Scaramucci’s SkyBridge Capital. It was one of the first Opportunity Zone funds structured as a real estate investment trust. The idea was to give investors access to development and redevelopment projects across different markets and property types through a single investment, with Form 1099 tax reporting to simplify the paperwork. It was revolutionary at the time.
Like you, I’m results oriented.
Not every DST is built the same. The same label can cover very different investments—and very different results. In my Q2 2026 dataset of investments that have gone full cycle, my preferred sponsors reported higher average annualized returns than the broader group of sponsors tracked.
That’s why I look beyond the structure at who’s behind the investment: how the sponsor underwrites the real estate, how much debt they take on, and how they respond when a plan stops working. That’s what I spend my time on, and it’s why I’d rather show you a track record than a brochure.
These figures are sponsor-reported and reflect a limited sample of completed investments. They’re subject to selection and survivorship bias, don’t represent the entire industry, and don’t guarantee future results.
Average annual return by investment type
Avg. annual return, %
Average annual return by investment type
Investment type
Avg. annual return
1031 Exchange Crowdfunding
3.7%
Net-Leased (NNN) DST Funds
5.1%
Private Real Estate Funds
8.5%
All Platform Sponsors
20.70%
Baker 1031 Preferred Sponsors
29.19%
Sources: 1031 Exchange Crowdfunding — Fundrise; Net-Leased (NNN) DST Funds — Cove Capital Investments; Private Real Estate Funds — Origin IncomePlus Fund; Baker 1031 All Platform Sponsors — simple average of the 1033 of 1082 full-cycle programs in the Baker 1031 results dataset that report both an equity multiple and a holding period, each recomputed from the sponsor’s own offering documents; Baker 1031 Preferred Sponsors — the 644 of those programs from preferred sponsors (Bluerock, ExchangeRight, NexPoint, Peachtree Group and Reliant). Baker 1031 figures are stated on one basis for every sponsor — (equity multiple − 1) ÷ holding period — a simple annual return over the life of each completed program, not compounded and not an IRR. The third-party figures are as published by each provider, on the bases they state: Cove Capital’s 5.10% is a simple average across its full-cycle debt-free DST offerings, measured as total distributions plus net sale proceeds less original equity over the life of each investment — the same construction used here; Fundrise’s 3.7% is a compound annualized return since the fund’s inception; Origin’s figure is for an open-ended fund rather than completed programs. A compounded figure and a simple one are not identical measures, and a fund still running is not a completed-program record. Each is the number its provider publishes for the strategy named, which is the comparison being drawn. Past performance is not a guarantee of future results.
How do we get started?
1
Introductory call
We discuss your goals, needs, exchange requirements, and timeline. Some investors call before listing their property. Others call after their sale closes. Wherever you are, that’s where we start—but speaking earlier gives us more time to work through the options.
2
Review opportunities
I narrow down the available investments to those that fit your situation, and we review them together. I’ll explain why I’m considering each one, what I like, and where I have reservations. We work through your questions before you make a decision.
3
Close
My team and I coordinate the paperwork and closing with the sponsor and your qualified intermediary. For the DSTs I offer, the properties have already been acquired and the offerings prepared. With complete paperwork, available funding, and the necessary approvals, closing can often take just two to three business days.
The deadlines
Your qualified intermediary should be in place before your property sale closes. From that closing, you generally have 45 calendar days to identify replacement properties in writing and 180 calendar days to complete the purchases, or your tax return’s due date, including extensions, if sooner. The 45 days are included in the 180 days.
If you’re considering a sale, we can start the conversation now.
The best time to call is before you sell. The second-best time is today. Once your sale closes, your 45-day identification clock is running. The earlier we talk, the more time we have to compare investments and work through your questions.
Most DST programs I work with have a $25,000 minimum for 1031 exchange investors. Minimums for mineral royalty investments and Opportunity Zone funds vary by program, and some cash investments start lower. Ask me, and I’ll tell you what’s currently available.
Yes, for the private offerings I work with. The two most common ways individuals qualify are:
Net worth: More than $1 million, individually or together with a spouse or spousal equivalent, excluding your primary residence.
Income: More than $200,000 individually, or $300,000 together with a spouse or spousal equivalent, in each of the last two years, with a reasonable expectation of reaching the same level this year.
There are other ways to qualify, too. If you’re unsure, we can work through that during our introductory call.
I’m compensated by the investment sponsor through the offering. The offering’s fees and expenses, including selling compensation, are disclosed in the private placement memorandum. Ask me, and I’ll walk you through the fee table line by line before you invest. You should understand what you’re paying and where that money goes.
No. The firm is based in San Francisco, with a Los Angeles office, but clients complete exchanges into properties throughout the country. We can handle our conversations, investment reviews, and paperwork by phone, video, and email.
You’ll complete a short, six-step intake form covering your exchange, goals, and investor background. It takes about three minutes.
I review it personally, and the next step is a brief introductory call. We’ll discuss your situation, answer your initial questions, and determine whether the investments I offer may be a fit. That conversation is part of my process before providing access to current offerings.
Understanding the Investments
In this context, it’s a trust that owns investment real estate—an apartment community, a distribution warehouse, a medical office building, or a portfolio of properties. You buy a fractional beneficial interest in the trust, and professional managers handle the properties.
When properly structured, your interest can qualify as replacement real estate for a 1031 exchange. You participate in the investment’s income, gains, and losses without managing the property yourself.
A 721 exchange generally allows you to contribute property to a partnership in exchange for partnership units without immediately recognizing the gain. Some DST programs use this to move investors into a REIT’s operating partnership.
You then own partnership units tied to its portfolio. Those units don’t qualify for another 1031 exchange, so it’s effectively a one-way door out of that strategy. We discuss that before you commit.
A 1031 exchange generally defers gain from investment or business real estate by exchanging into qualifying replacement real estate. An Opportunity Zone fund can accept eligible gains from other assets, too, including stocks and businesses. Generally, only the gain needs to be reinvested, within an applicable 180-day window.
The timing matters. For qualifying investments made through 2026, deferral of the original gain ends no later than December 31, 2026. Qualifying investments made beginning January 1, 2027, generally allow deferral for up to five years. A qualifying long-term investment may also receive favorable treatment on the fund’s appreciation. We work through the rules that apply to your dates.
They’re investments in collections of oil and gas royalty interests. You receive a share of production revenue without drilling wells or operating them yourself. Your income depends on factors such as production levels and commodity prices.
Certain mineral and royalty interests can qualify as replacement property for a 1031 exchange. The exact rights you own and how the investment is structured matter, so we confirm eligibility for the particular offering.
REIT shares don’t qualify as replacement real estate for a 1031 exchange. I consider them as cash investments outside an exchange, and some DST programs provide a route into a REIT’s operating partnership through a 721 exchange.
That second route initially gives you operating-partnership units. Any later conversion into REIT shares is a separate step with its own terms and tax consequences.
Planning Your Exchange
Both clocks start when your property sale closes. You generally have:
45 calendar days to identify replacement property in writing, typically with your qualified intermediary.
180 calendar days to complete your replacement purchases—or your tax return’s due date, including extensions, if that comes sooner.
The 45 days are included within the 180 days. Weekends and holidays count, and you don’t have to wait until day 45 to close.
Not necessarily. Tell me when your sale closed, what you’ve already identified, and where your exchange stands.
DSTs can sometimes be identified and purchased quickly. They can also serve as backup identifications alongside properties you’re pursuing directly, provided everything fits within the identification rules. The sooner we speak, the sooner we can see what’s workable.
A DST closing can sometimes happen in as little as two to three business days once your paperwork is complete, your qualified intermediary has the funds, and the necessary approvals are in place.
The underlying property has already been acquired, which removes a substantial part of the preparation. The actual timing still depends on the offering, availability, and everyone involved in the closing.
Yes. One property sale can be divided among several qualifying DST investments, allowing us to consider different property types, sponsors, and locations.
We still need to follow the identification limits and make sure the combined investments meet your exchange requirements. Spreading the investment around also doesn’t eliminate the possibility of losses.
We revisit the plan. Sale proceeds can differ from the estimate, loan payoffs can change, and properties can fall out of contract.
Before your identification deadline, we may be able to revise the selection. After that deadline, we generally have to work within the properties you validly identified. Tell me as soon as something changes so we can assess the available options while there’s still time.
Choosing and Reviewing Investments
I start with your exchange numbers—equity, debt, and deadlines—then your income needs, goals, and comfort with risk. From there, I consider which of the offerings that passed my due diligence process might fit.
More offerings are declined than advanced. If you want to know why something didn’t make the cut, ask me.
I look at the sponsor’s experience and track record, including investments that have gone full cycle. Then I work through the property, market, financing, business plan, fees, and offering terms.
I also examine the cash-flow assumptions and put the fees in context against projected income. I want to understand what has to happen for the plan to work, what could go wrong, and what the sponsor can do about it.
The private placement memorandum, or PPM, is the offering’s main disclosure document. It explains the investment, financing, fees, risks, conflicts, and terms.
It should be read alongside the trust or partnership agreement, subscription documents, and any supplements. This website gives you the summary; the complete offering documents give you the details you need to evaluate the investment.
Holding and Exiting Your Investment
Plan on committing your money for the investment’s expected holding period, with the possibility that it takes longer. DSTs generally have no established resale market. Some other funds or REITs offer limited redemption programs, but those can be restricted or suspended. We review the terms of each investment before you commit.
Across the 1033 completed sponsor programs in the track record data I maintain, the average hold was 5.0 years. That figure excludes programs still underway and isn’t a promised exit date—or a guarantee that you’ll receive cash at the end of that period.
After the property is sold and debts, expenses, and required reserves are accounted for, the remaining proceeds are distributed according to the offering’s terms.
If you plan to complete another 1031 exchange, arrangements need to be in place before the sale so the proceeds are handled properly. Otherwise, you can receive the cash and pay any applicable tax.
Some programs instead provide for a 721 contribution into a REIT’s operating partnership. That’s a separately structured transaction, not something you automatically choose after receiving cash from a sale. We discuss the available exit paths before you invest.
Some offerings accept retirement funds, depending on the offering and what your custodian or retirement plan permits. Private investments may require an eligible self-directed account.
That’s a separate discussion from a 1031 exchange involving property you own personally. We need to consider account eligibility, tax treatment, liquidity, and any required distributions before deciding whether an investment fits.
A DST interest can generally pass to your heirs under your estate plan. For interests held outside retirement accounts, inherited-property rules may adjust the tax basis to fair market value, potentially eliminating the deferred gain built into the interest.
That treatment isn’t automatic for every ownership arrangement or investment type. Retirement accounts and Opportunity Zone investments, for example, have different rules. Your tax and estate advisors should confirm how your particular investment will pass and how it will be taxed.
Have more questions? Ready to get started?Talk to Jerry.
Hi, I’m Jerry Baker. I’m the founder of Baker 1031 Investments, a real estate securities brokerage specializing in helping individual investors explore institutional investments for their 1031 exchanges. Over more than a decade in the industry, I’ve had the opportunity to participate in over $10 billion in real estate investment activity. Through a combination of education, investment guidance, and transactions, I’ve reached more than 250,000 real estate investors.
