The Challenge: Stepping Away from Property Management
After decades of owning and managing real estate, a retired lifeguard was ready to transition into a truly passive investment strategy. He had built a successful portfolio over the years, but the daily responsibilities of property management—handling tenants, maintenance, and financial oversight—no longer aligned with his retirement goals.
When the opportunity arose to sell a duplex for $1.5 million, a property he had originally purchased for just a few hundred thousand dollars, he faced an important decision. He wanted to defer capital gains taxes through a 1031 exchange but needed a solution that would allow him to generate passive income without the burdens of ownership.
Despite having access to investment options across the industry, he ultimately chose to split his exchange into three Delaware Statutory Trusts (DSTs) with RealtyMogul. Here’s why.
Why He Chose RealtyMogul
1. In-Depth Education and Personalized Guidance
Unlike other investment platforms that simply offer DSTs, RealtyMogul took the time to educate and guide him through the process. Steve and his team dedicated dozens of hours across phone calls, video conferences, and in-person meetings at the investor’s home to ensure he fully understood the potential benefits and risks of a 1031 exchange and investing in DSTs.
Rather than pushing a quick transaction, the team prioritized deliberate and careful planning, holding all the parties accountable so that there were no surprises throughout the 1031 process.
2. Trust and Transparency in Due Diligence
One of the investor’s key concerns was understanding the real risks associated with DSTs. RealtyMogul provided a transparent and thorough insight into the due diligence process, allowing him to evaluate each investment opportunity with confidence.
- He had direct access to analysts and underwriters, enabling him to understand both the potential upside and risks of each DST.
- The RealtyMogul team took a risk-first approach, helping him identify and strategize ways to mitigate potential downsides in each investment.
- Instead of being sold on returns alone, the investor felt empowered to make an informed decision based on data and expert insights.
3. Seamless Investment Management with the RealtyMogul Dashboard
One of the standout benefits of working with RealtyMogul was the investor dashboard—a centralized platform that made managing his DST investments incredibly simple.
- Instead of juggling multiple investor portals and logins, RealtyMogul provided a single location where he could access:
- Distribution records
- Deal summaries
- Essential documents
- Annual tax reports
This user-friendly interface eliminated the complexity of managing multiple investments across different sponsors and platforms. The investor had never experienced another firm in the industry offering such a powerful and intuitive investment management tool.
The Outcome: A Fully Passive, Diversified Portfolio
By partnering with RealtyMogul, the investor successfully:
- Completed a 1031 exchange, deferring capital gains taxes.
- Diversified his $1.5M investment across three DSTs, 10 properties, several different asset classes, and different markets across the country…reducing risk exposure.
- Transitioned from active property management to a hands-free investment strategy.
- Gained access to high quality real estate with professional asset management, ensuring his investments were monitored by experienced real estate operators.
- Obtained the ability to monitor his investment information in a cutting edge investor dashboard, so he can keep track of the performance and manage his investment information.
This case study demonstrates how RealtyMogul’s education, transparency, and technology-driven platform empower investors to confidently transition from active management to passive, tax-efficient real estate investing.
Considering a 1031 exchange? Learn how RealtyMogul can help you navigate the process and build a diversified, passive income portfolio.
LEARN MORE ABOUT 1031 EXCHANGE
Disclosure - 1031 Exchange Risk
Internal Revenue Code Section 1031 (“Section 1031”) contains complex tax concepts, and certain tax consequences may vary depending on the individual circumstances of each investor. RM Securities and its affiliates make no representation or warranty of any kind with respect to the tax consequences of your investment or that the IRS will not challenge any such treatment. You should consult with and rely on your own tax advisor about the tax aspects with respect to your particular circumstances. Please note that RealtyMogul does not provide tax advice.
This article is for informational purposes only, and is not a recommendation or offer to buy or sell securities. Information herein may include forward looking statements and is for informational purposes only. Forward-looking statements, hypothetical information, or calculations, financial estimates and targeted returns are inherently uncertain. Past performance is never indicative of future performance. None of the opinions expressed are the opinions of RealtyMogul. Advice from a securities professional is strongly advised, and we recommend that you consult with a financial advisor, attorney, accountant, and any other professional that can help you to understand and assess the risks and tax consequences associated with any real estate investment. All real estate investments are speculative and involve substantial risk and there can be no assurance that any investor will not suffer significant losses. A loss of part or all of the principal value of a real estate investment may occur. All prospective investors should not invest unless such prospective investor can readily bear the consequences of such loss.
RealtyMogul and its affiliates are not registered as a crowdfunding portal. Unless stated otherwise in writing, RealtyMogul and its affiliates do not offer brokerage or investment advisory services to the Platform’s individual users. RM Adviser, LLC, a wholly owned subsidiary of RealtyMogul, is an SEC-registered investment adviser providing investment management services exclusively to certain REITs and single purpose funds. Past performance is not indicative of future results. Forward-looking statements, hypothetical information or calculations, financial estimates, projections and targeted returns are inherently uncertain. Such information should not be used as a primary basis for an investor’s decision to invest. Investments in real estate, including those offered by sponsors using the RealtyMogul platform, are speculative and involve substantial risk. You should not invest unless you can sustain the risk of loss of capital, including the risk of total loss of capital.