Nearing Retirement and Done Being a Landlord? Here Are All of Your 1031 Options
For 1031 investors who are tired of managing property, there are several alternatives beyond just buying another building or moving into a passive DST. It depends on how much control and work you actually want to keep.
Many 1031 investors — especially those who are nearing retirement — don't understand the full breadth of replacement options available to them.
Most of them are in a similar spot: They own a rental or a small commercial building, and they're worn out from the day-to-day management. They're ready to sip piña coladas on the beach, not answer phone calls or text messages about how the plumbing stopped working or what the pet fee will be if their tenant gets a fourth cat.
In 2024, 38% of landlords said property upkeep is one of their biggest issues, and in 2026, a survey of 4,055 independent landlords showed that ownership costs rose for 74.4% of them.
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That paints a clear picture of collective landlord psychology: They're sick of maintenance, and to make matters worse, prices keep rising.
Since the 1031 exchange is such a good option for deferring taxes, most landlords are heavily incentivized to keep the money working for them in real estate (and that's especially true for retirees who are investing for cash flow).
So, what are their options? Most investors think there are only two:
- Go passive through a Delaware statutory trust (DST)
- Stay in control by buying another building and doing the work all over again
Completely passive with lower returns or potentially stroke-inducing total control?
In reality, this is a false dichotomy.
The actual range of options is much wider.
Once you sell, you have 45 days to formally identify a replacement property and 180 days to close. That window is short — and the IRS is not lenient at all about missing deadlines, so let's get started.
The full range of options, from most work to least
Another active property. This is the default option. And, frankly, for some sophisticated investors who have the time and patience for it, it's the right answer.
You trade into another rental, a multitenant building or a value-add project, and you keep full control along with full responsibility:
- Tenants
- Repairs
- Vacancies
- Taxes
- Insurance
If the reason for the exchange was the work itself, this puts you back where you started, usually with a larger asset. Not ideal for someone nearing retirement.
Tenancy in common (TIC). A TIC lets several investors hold direct, fractional title to a single property. You keep the standing of a direct owner, which is more control than a fractional trust interest gives you, but decisions generally require coordination among the other owners, and financing is more complicated because the lender underwrites the group.
It sits in the middle, and it has become less common than it once was.
A Delaware statutory trust. With a DST, you buy a fractional beneficial interest in a professionally managed, institutional-grade asset, and a sponsor runs everything.
The appeal is convenience: A DST can close in three to five business days, minimums are low, and you can spread proceeds across several of them for diversification.
Those are meaningful advantages when the 45-day clock is tight or the remaining balance to place is small.
The trade-off, of course, is control.
In order to qualify for a 1031, a DST has to follow a set of IRS rules (often called the seven deadly sins): Among them, the trust:
- Cannot take on new financing
- Cannot sign new leases
- Cannot make major capital improvements
- Cannot reinvest sale proceeds
Investors get no vote on when the property sells, and because proceeds cannot be redeployed inside the trust, the sponsor's exit sets the timing of your next exchange.
Fees are the other consideration, since front-end fees on DST offerings commonly run 10% to 15% and are disclosed inside a lengthy private placement memorandum.
For frustrated, burnt-out landlords, that seems like it's an easy trade … but it's not the only option available to you if you want to move from being fully active to being mostly passive.
The lesser-known middle-ground options
Single tenant NNN (triple net). While this is still technically 100% ownership, it stands out because it shifts the maintenance responsibilities onto the tenant. With a NNN property, you hold title outright and lease the building to a single tenant, usually on a long 10- to 15-plus-year lease, and the tenant pays the three nets:
- Property taxes
- Insurance
- Maintenance
You keep control (the hold, the sale and the timing of your own exchange), and the operating burden shifts to the tenant, so your responsibilities as owner are low.
The pricing behaves a lot like fixed income: Single tenant net lease assets traded around a 6.80% cap rate as of the first quarter of 2026, and the yield tracks the tenant's credit and the remaining lease term more than the building itself.
Absolute NNN. This is a triple net lease taken to its furthest point. The short version: The tenant carries everything, including the roof and structure, which is not always true of all NNN leases.
A REIT. Worth naming mostly to correct a common assumption: You cannot complete a 1031 exchange directly into REIT shares, because a share of a trust is not like-kind to real property.
There is an indirect path called an UPREIT (a DST interest can later be contributed to a REIT operating partnership through a Section 721 exchange), but that is effectively a one-way door out of 1031 treatment, since you generally cannot exchange out again afterward.
There are also plenty of hidden risks associated with this strategy.
Weighing your options: Two questions to answer
In evaluating these options, you need to answer two questions:
- How much control do you want to keep?
- How much of the work are you willing to do yourself?
A DST gives up control almost entirely in exchange for simplicity, which suits an investor who just wants it all to be over with.
A single tenant absolute NNN property keeps title, control and exchange timing in your hands while keeping the work low, which suits an investor who was tired of the job rather than tired of owning. Another active building keeps everything: Control and work alike.
Each is a legitimate answer to a different set of priorities.
Whatever you land on, three habits pay off early: Match the structure to whichever of those priorities is most important to you, read the underlying documents (the lease on a net lease deal, the private placement memorandum on a trust) and make sure to cross your t's and dot your i's. The 45-day clock rewards the investors who have thought it through before they sell.
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