Case Studies: Direct Title Securities

This case study highlights how Breakwater Exchange’s direct title security structure empowered one investor with full ownership, control, and tax-deferral benefits.

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Retaining Control of a 1031 Exchange With Direct Title Securities: An Example

Our client owned a single tenant, multi-family property that he wanted to sell and perform a 1031 exchange on. The property was fully paid off and had about $1M in proceeds after closing costs. The investor desired a more passive approach in order to take the day-to-day responsibilities of property management off his plate, however remained adamant on maintaining control over the decision and ability to sell his property sometime in the future

Tailored Strategies From Breakwater Exchange for Complete Control

Breakwater Exchange presented a portfolio of pre-vetted direct title securities across growth-focused markets. The investor selected three single-family homes in two landlord-friendly states, boosting tenant quality and diversification. Because the selection occurred before his relinquished property closed escrow, we coordinated a simultaneous exchange with zero disruption to his rental income. He gained increased monthly cash flow, investment-grade tenants, and created a refinancing pathway to access tax-free liquidity at any point, without ever involving a traditional bank.

The Result: Diversification, Liquidity, and Long-Term Income Secured

The investor transitioned from managing a single property to owning three stabilized homes leased to stronger, more financially secure tenants. With Breakwater Exchange’s vetted process and direct title security solutions, his monthly income increased and became more predictable. The transaction closed simultaneously, ensuring no income gap or exchange risk. Additionally, a built-in refinancing option gave him access to up to 65% of his equity, tax-free, should future liquidity be needed. Most importantly, the investor maintained full decision-making power, positioning his assets to grow in value while providing dependable cash flow with long-term exit control.

Take Command of Your Real Estate Strategy By Partnering With Breakwater Exchange

Our team crafts 1031-qualified direct title strategies that keep you in control, offering fixed monthly income, exit flexibility, and full-title ownership.

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FAQs About Our Direct Title Security Solutions

How do direct title securities qualify for a 1031 exchange?

Breakwater Exchange structures each direct title security solution as a single-member LLC that owns a physical property with a title and CUSIP. This structure is eligible under IRC Section 1031, allowing you to defer capital gains taxes while maintaining 100% ownership.

What if I want passive ownership but still maintain control?

Breakwater Exchange’s direct title offerings come with professional property management, handling all leasing and maintenance, while you retain full ownership rights. You choose when to sell, refinance, or hold.

Can I tailor the leverage to meet exchange debt requirements?

Yes. Breakwater Exchange offers flexible financing options so you can meet your 1031 replacement debt requirements without the constraints of traditional bank loans. You stay in control while fulfilling IRS guidelines.

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General Disclosure
All investing involves risk of loss of some or all principal invested. Past performance is not indicative of future performance. There can be no guarantee that any investment or strategy will achieve its stated objectives. Speak to your tax and/or financial professional prior to investing.

Real Estate / 1031 Risk Disclosure
There is no guarantee that any strategy will be successful or achieve investment objectives; Potential for property value loss – All real estate investments have the potential to lose value during the life of the investments; Change of tax status – The income stream and depreciation schedule for any investment property may affect the property owner’s income bracket and/or tax status. An unfavorable tax ruling may cancel deferral of capital gains and result in immediate tax liabilities; Potential for foreclosure – All fnanced real estate investments have potential for foreclosure; Illiquidity –These assets are commonly offered through private placement offerings and are illiquid securities. There is no secondary market for these investments;Reduction or Elimination of Monthly Cash Flow Distributions – Like any investment in real estate, if a property unexpectedly loses tenants or sustains substantial damage, there is potential for suspension of cash ﬂow distributions; Impact of fees/expenses – Costs associated with the transaction may impact investors’ returns and may outweigh the tax benefts. Stated tax benefts – Any stated tax benefts are not guaranteed and are subject to changes in the tax code. Speak to your tax professional prior to investing.

Opportunity Zones Disclosures
Investing in opportunity zones is speculative. Opportunity zones are newly formed entities with no operating history. There is no assurance of investment return, property appreciation, or profits. The ability to resell the fund’s underlying investment properties or businesses is not guaranteed. Investing in opportunity zone funds may involve a higher level of risk than investing in other established real estate offerings. Long-term investment. Opportunity zone funds have illiquid underlying investments that may not be easy to sell and the return of capital and realization of gains, if any, from an investment will generally occur only upon the partial or complete disposition or refinancing of such investments. Limited secondary market for redemption. Although secondary markets may provide a liquidity option in limited circumstances, the amount you will receive typically is discounted to current valuations. Difficult valuation assessment. The portfolio holdings in opportunity zone funds may be difficult to value because financial markets or exchanges do not usually quote or trade the holdings. As such, market prices for most of a fund’s holdings will not be readily available. Capital call default consequences. Meeting capital calls to provide managers with the pledged capital is a contractual obligation of each investor. Failure to meet this requirement in a timely manner could elicit significant adverse consequences, including, without limitation, the forfeiture of your interest in the fund. Leverage. Opportunity zone funds may use leverage in connection with certain investments or participate in investments with highly leveraged capital structures. Leverage involves a high degree of financial risk and may increase the exposure of such investments to factors such as rising interest rates, downturns in the economy or deterioration in the condition of the assets underlying such investments. Unregistered investment. As with other unregistered investments, the regulatory protections of the Investment Company Act of 1940 are not available with unregistered securities. Regulation. It is possible, due to tax, regulatory, or investment decisions, that a fund, or its investors, are unable realize any tax benefits. You should evaluate the merits of the underlying investment and not solely invest in an opportunity zone fund for any potential tax advantage.