Case Study: Rental Property Exchange With DSTs

At Breakwater Exchange, we simplify complex 1031 exchanges by creating personalized, diversified solutions for every investor. See how our proven DST strategies made retirement smoother for one Southern California couple.

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Retiring Smarter and Eliminating Landlord Stress With Passive Income

John and Cindy, a couple in their 60s, had long relied on rental properties in Southern California for income. One property in particular had become a burden: aging infrastructure, declining tenant quality, and rising maintenance costs posed a challenge. Faced with the choice to invest significant capital into renovations or accept a large tax bill upon sale, they were stuck. Though they’d heard of 1031 exchanges, the timing and complexity made them hesitant. They wanted to transition into a passive investment while still protecting their gains and income stream. They just didn’t know how to start.

Strategic Diversification Through DSTs: A Plan With Purpose

Working with Breakwater Exchange, John and Cindy transitioned the proceeds from their property into three professionally managed DSTs. Each asset was institutional-grade, spread across multiple states, and included a unique investment strategy, creating a blend of stability and growth potential. The plan removed the stress of tenant management and eliminated the exchange risk they were worried about.

The Results: More Income, Less Stress, Greater Freedom

John and Cindy’s transformation wasn’t just transactional; it was life-changing. By reallocating their equity into diversified DSTs with Breakwater Exchange, they moved from managing a single aging property to benefiting from professionally operated assets in multiple regions. Their annual income grew from approximately $45,000 to over $60,000, with none of the day-to-day responsibilities. Most importantly, they gained peace of mind. Without tenants to manage or repairs to oversee, they now enjoy more time together in retirement, while their portfolio continues working for them behind the scenes.

Unlock Hands-Off Income With Breakwater Exchange

Let our team guide your 1031 exchange into a future of passive income and strategic diversification. Breakwater Exchange delivers turnkey DST solutions customized to your goals.

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FAQs About Our DST Exchanges Strategies

What if I want to do a traditional 1031 exchange into DSTs but don’t know where to start?

Breakwater Exchange offers end-to-end guidance to help you execute a compliant, timely, and seamless 1031 exchange into one or more DSTs. We align property options to your goals while handling the details, so you don’t have to.

Can I use a DST strategy even if I want to take some cash out from my sale?

Yes. Breakwater Exchange works with investors who want partial cash-out options by helping structure a “boot” strategy that defers a portion of capital gain taxes through a partial DST investment.

What if I want to keep direct title to my property instead of going fully into DSTs?

Breakwater Exchange also offers hybrid solutions that allow for combining DSTs with directly titled property acquisitions. This gives you more flexibility while still utilizing the 1031 exchange benefits we’re known for.

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Breakwater Exchange’s expert guidance helps you maximize returns while minimizing tax exposure, so you can invest with clarity and confidence.

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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.