Replacement Property Strategies
Understanding your replacement options is critical to a successful 1031 exchange. This page outlines common strategies investors use to align reinvestment decisions with income goals, diversification, and long-term planning.
After selling relinquished property, investors must identify and acquire suitable replacement property within strict IRS timelines. The right strategy balances compliance, risk management, income continuity, and long-term objectives.
At i1031u.com, we help investors and their advisors evaluate replacement property strategies with clarity and structure — supporting informed decisions without unnecessary complexity.
Core Replacement Strategies
Investors completing a 1031 exchange may use one or more replacement property identification strategies depending on goals, timelines, and risk tolerance.
Common approaches include:
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Direct property replacement
Acquiring one or more like-kind properties directly, often requiring active management and transaction coordination. -
Delaware Statutory Trusts (DSTs)
Fractional interests in institutional-grade real estate designed to meet 1031 exchange requirements. -
Diversified replacement portfolios
Allocating exchange proceeds across multiple properties or structures to reduce concentration risk.
Each strategy carries different considerations related to control, income profile, liquidity, and operational involvement.
Delaware Statutory Trusts (DSTs)
DSTs as Replacement Property
Delaware Statutory Trusts (DSTs) are commonly used as replacement property in 1031 exchanges, particularly by investors seeking passive ownership and institutional-scale assets.
DSTs may offer:
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Passive ownership with professional asset management
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Exposure to diversified real estate sectors
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Predictable income distributions
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Simplified exchange execution within IRS timelines
DSTs are often used by investors transitioning away from active property management while maintaining real estate exposure and tax deferral.
Diversification & Income Considerations
Aligning Strategy With Long-Term Objectives
Replacement property decisions should reflect more than timing requirements. Investors often evaluate:
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Income continuity and distribution profiles
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Diversification across asset types, geographies, or sponsors
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Risk tolerance and capital preservation goals
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Estate and succession planning considerations
At i1031u.com, we help coordinate these discussions so investors and advisors remain aligned throughout the exchange process.
Coordination & Execution
Supporting Structured Decision-Making
Replacement strategy selection often involves multiple parties, including CPAs, attorneys, qualified intermediaries, and investment sponsors. Proper coordination requires a shared understanding of 1031 exchange timing and identification rules, particularly during the early stages of strategy evaluation.
Our role is to support coordination by:
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Clarifying timelines and identification requirements
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Helping organize replacement options for review
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Supporting informed decision-making across advisory teams
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Keeping execution structured and compliant
We work alongside — not in place of — trusted advisors.
Continue Learning
Once replacement strategies are understood, advisors and investors often benefit from deeper guidance on coordination, documentation, and communication.
Advisors may also explore our Resources for Advisors.
This material is provided for educational purposes only and is not intended as tax, legal, or investment advice. Investors should consult their own tax, legal, and financial advisors regarding their specific circumstances. Replacement property offerings may be available only to eligible investors and are subject to availability and regulatory requirements.