If you’ve been following along, you know we’ve been building a roadmap to help real estate investors stack the odds in their favor when completing a 1031 Exchange.
In Part One, we tackled the shocking truth: more than 60% of exchanges fail, and the biggest culprit is lack of planning. We dove into why your planning process should start long before you list your property, and how missing the mark on ownership structure, timeline, or eligibility can derail your entire exchange.
In Part Two, we covered the First Steps—the actual calls you need to make before putting your property on the market. That means talking to your CPA to understand your true tax exposure. Then meeting with your estate attorney and financial planner to discuss wealth preservation, trust planning, and long-term financial goals. And finally, scheduling a strategy session with me, @1031BrokerJames, so we can design a game plan that fits your goals—not someone else’s assumptions.
Now, in Part Three, we move into the action phase. Welcome to:
Next Steps – Know Your Options!
This is Where the Winners Separate from the Wishful Thinkers
At this point, you’ve done the smart work of assembling your team and mapping your goals. But now it’s time to shift your thinking from seller to buyer—before your property even hits the open market.
If your strategy is “list now and figure out the replacement property later,” I’ve got bad news for you: you are already behind. Once that escrow closes, your 45-day identification window begins—and most deals that fail do so during this short fuse.
Let’s flip that script.
Step One: Start Thinking Like a Buyer
You need to be actively exploring your replacement property options while you’re prepping your current property for sale. Ask yourself:
- What kind of income stream am I looking for?
- Do I want to be hands-off? Or do I still want some control?
- What asset classes or markets match my investment goals?
Your buy-side broker (and if you don’t have one, I know a guy) should be actively sourcing inventory based on this criteria. Don’t just react to listings—get proactive. You should be reviewing upleg opportunities before you ever sign a listing agreement.
What about that debt that needs to be replaced? Have you any idea of the steps and processes involved in acquiring financing these days? You should also be shopping lenders right now!
Step Two: Understand Your Passive Investment Options—Like DSTs
If you’re done managing tenants, toilets, and trash, or simply no longer want to be a fee simple property owner—but you still want tax deferral and monthly income—then you need to explore Delaware Statutory Trusts (DSTs).
DSTs allow you to fractionally own institutional-grade real estate—think medical centers, assisted or student housing, or logistics centers—without the headache of active management. They’re often overlooked, but they can be powerful exit strategies for seasoned investors.
Your financial advisor should already be talking with DST sponsors to line up suitable replacement options—before your clock starts ticking.
Step Three: Have a Backup Plan (And a Backup to Your Backup)
The market shifts. Deals fall through. Interest rates move. What happens if your preferred upleg gets scooped up before you can act? What if a DST fills before your funds hit?
You don’t want to start thinking about these contingencies after your downleg closes. You already want to have Plan B and C vetted and ready to go.
That kind of optionality gives you confidence. And confidence creates leverage.
Power Comes from Planning
There’s a reason we call this stage the “Next Steps.” This is when we align what’s possible with what’s practical. You’re no longer speculating. You’re strategizing. You’re not just trying to “defer taxes”—you’re actively positioning your capital to perform.
So, what does success look like here?
✅ You’ve previewed viable upleg options.
✅You’ve researched potential lenders
✅ You’ve explored and confirmed passive investment alternatives.
✅ You have contingency plans in place.
✅ You know the market—and you know what to avoid.
Ready to Get in Position?
If you’re an investment property owner thinking about a 1031 Exchange, and you want to approach this process with intention—not desperation—then now is the time to start the conversation.
We Are Here to Help!
If you are an investment property owner who is interested in a no obligation, private consultation, please visit www.Best1031Online.com, or contact James Bean
of SVN-Rich Investment Real Estate Partners, CA DRE# 01970580, at 805-779-1031
or email at [email protected].
If you are an agent/broker, I am happy to discuss strategies with you on how to best serve your next listing client in preparing them for a successful exchange. Please visit the site and click on the Agent’s button located at the top right-hand corner of the Home Page!
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Click here for a Glossary of Terms: https://svn-best1031online.com/glossary/
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All information is deemed to be accurate and is not tax or legal advice. All investors/taxpayers should consult their CPA, tax attorney and investment advisors.