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How to turn a 1031 Exchange into a REIT

In 1031 exchanges, the IRS doesn't categorize REIT shares as "like-kind" assets, thus precluding a direct exchange. However, investors can pivot towards a Delaware Statutory Trust (DST), which the IRS recognizes as a "like-kind" property. Under IRC Revenue Ruling 2004-86, acquiring a DST interest is the initial step. Some DSTs subsequently integrate into a REIT as part of their operational strategy. Through this evolution, investors can opt for a section 721 exchange, transitioning their DST interests into shares of the REIT's operating partnership (OP Units) on a tax-deferred basis. Typically, these OP Units hold the potential for one-for-one conversion into the REIT's common stock. It's important to note that not all DSTs follow this trajectory, and even if they do, the certainty of a UPREIT/721 exchange remains uncertain. Report the Exchange on Form 8824 Always ask your financial advisor if this or any idea is appropriate for your investment plans.

Finding the property with the right things wrong There are 6 Levels of Improvement that will increase the ROI on your property. To find “the house with the right things wrong,” This strategy allows for a high return on investment (ROI) through sweat equity, rather than expensive repairs. This type of property is often called a “fixer-upper with good bones”. 1. The right things wrong (cosmetic issues) Focus on properties where your labor and budget will have the most visible and valuable impact. These are the problems that scare off most buyers, but are relatively inexpensive to fix. 2. Outdated decor: “Unfortunate tile and terrible paint colors are your best friends,” according to designer Lauren Liess. Dated bathrooms and kitchens may look bad but can be a huge source of equity if the layout is functional. 3. Poor curb appeal: The first impression a home makes can significantly affect its value. Cosmetic issues with the exterior, such as overgrown landscaping, a dirty exterior, or a dated front door, can be improved cheaply and deliver a high ROI 4. Worn surfaces: Worn or dirty flooring, scuffed paint, and aging kitchen cabinet hardware are relatively minor fixes. Refinishing existing hardwood floors is a budget-friendly option that can offer a fresh, clean look. 5. Chopped-up floor plan: For older homes, look for a layout that can be opened up to feel more spacious and modern. However, be cautious if walls are load-bearing, as altering them is a major, expensive project. 6. And one more mistake – Please don’t use green or orange rugs, appliances, or wallpaper, at least not this century, these color choices from the ‘60s, and ‘70’s are design killers.

Planning ahead for ADUs - Accessory Dwelling Units Once called Granny Units now a completely different investment vehicle, for instance, More ADUs Are Now Allowed on Multifamily Lots The new 2025 law increases the maximum number of detached ADUs on multifamily properties to eight. This is a significant change for you if your property has apartments or units. The number of new ADUs may, however, not exceed the existing number of units within the multifamily dwelling.· It Is now easier for Unpermitted ADUs to Become Legal ADUs built before January 1, 2020, may not have the correct permits in place. If this is the case for you, the 2025 law will help you get your older unit up to code without fear of fees or penalties. City building departments are required to provide you with a checklist of upgrades and repairs needed to obtain the necessary legal permits.· 3. ADUs May Be Sold as Separate Condominiums if Your City Allows It· The new state ADU law enables cities to let you sell your ADU separately from your home — but each city and county needs to pass this into law for itself. So, while the new laws authorize the sale of ADUs separately, it is up to local agencies to give the final go-ahead

4. All California municipalities are now required to have a preapproved ADU plan in place. Architects can submit preapproved ADU plans for cities to review and accept, significantly speeding up the approval process.

· 5. Permits for Coastal Zone ADUs Will Soon Be Easier to Obtain· The 2025 ADU law requires the California Coastal Commission to provide local municipalities with clear guidance on revising their coastal programs to streamline the ADU approval process. The deadline for this is July 1, 2026, and it should expedite the process of building an ADU if you are in a coastal zone.

· The Prohibition on Owner-Occupancy Limitations Has Been Extended The state law prohibiting local agencies from imposing owner-occupancy regulations on ADUs expired on January 1, 2025. The new ADU law extended this prohibition indefinitely, ensuring your right as a homeowner to rent out your ADU. Make sure you understand all the ADU rules in California before renting.

· The new 2025 laws provide reassurance that ADUs in California are here to stay. These versatile units are a savvy way to create a home studio, accommodations for extended family, or even a cozy nest that young adult children can call home while they establish their careers Like many state ordinances, there may be variations in how these laws are interpreted in local cities and counties. While navigating the complexities of the new laws can be challenging,· Now Is the Perfect Time to Build Your Dream ADU – and don’t forget, adding an ADU can also boost the value of your proper Start smart, invest in yourself, get the knowledge you need to identify the best deals. No matter where you are at, if you plan on doing one deal a year, make sure that it counts and is aligned with your goals. Don’t forget, you CANNOT write off depreciation If there is nothing on the land, there is nothing to depreciate!

Have your been curious about investing in Tax Liens, but you aren't sure how to obtain a list of properties with delinquent property taxes?Delinquent Tax Lists – Since you can usually obtain delinquent tax lists without requesting them in person, The Delinquent Tax List allows you to potentially invest in vacant land list, either find another county do more research online or contact the authors of this book www.joefairless.com or www.theohicks.org

The Real Estate Investment &Tax Letter – There is an overload of virtual classes, workshops and meetings whose purpose is to sell you the same old ideas hidden behind expensive training that you will never use. The RETax&Investment Letter focuses on sharing ideas, resources, experiences and questions and answers. Join us for the small price of $30.00 month, billed annually.

A gift for our subscribers – Free Property Analysis Worksheet a gift from one of our favorite vendors. Where you can input the dollar amounts of a deal and determine it looks like the th kind of return you are looking for. https://www.stessa.com/blog/rental-property-analysis-spreadshee