From Fixing Pipes to Building Memories: How a 1031 Exchange Helped Me Reimagine Real Estate Investing

By Marc Lescarret, CFP® 7/31/2026

When most people think about investing in real estate, they picture collecting rent checks and watching property values increase over time. That certainly can happen—but anyone who has owned rental property knows there’s another side to the story.

For me, that story began with a rental condominium in Parsippany, New Jersey.

It served me well for many years. The property appreciated in value, generated rental income, and provided valuable tax benefits through depreciation. From a financial perspective, it was a successful investment.

From a lifestyle perspective, it slowly became something different.

There were leaking pipes.

Unexpected repairs.

Tenant concerns.

Lease renewals.

Contractors.

Vacancy concerns.

Maintenance issues.

None of these challenges were unusual. In fact, they’re simply part of owning rental real estate.

But after enough years, I found myself asking a simple question:

“Is there a better way to stay invested in real estate without all the day-to-day responsibilities?”

As both a financial planner and an investor, I believe investments should support your life—not consume it. That question ultimately led me down a path that many investors have heard about but few fully understand: the 1031 Exchange.

What Is a 1031 Exchange?

Section 1031 of the Internal Revenue Code allows owners of investment real estate to defer certain taxes when selling one investment property and purchasing another qualifying investment property.

The key word is defer.

A 1031 exchange does not eliminate taxes. Instead, it generally postpones capital gains taxes and depreciation recapture by carrying your investment into another qualifying property.

Rather than immediately paying taxes and investing what’s left, a 1031 exchange allows more of your equity to continue working for you.

Think of it as moving your investment from one piece of real estate into another while preserving the opportunity for continued tax-deferred growth, provided all IRS requirements are met. While the capital gains are deferred, there are strategies to get back tax-free cash and to even have your family inherit these assets tax-free.  >>Schedule a free consultation with Marc to learn more

My Decision

When I decided to sell my Parsippany condominium, I had several choices.

I could simply sell it.

Pay the taxes.

Move on.

Instead, I decided to complete a 1031 Exchange and remain invested in real estate. However, I didn’t want another property where I would be replacing water heaters, negotiating leases, and coordinating plumbers.

I wanted to own real estate.

I just didn’t want another part-time job.

That’s when I discovered the Delaware Statutory Trust, commonly known as a DST.

What Is a Delaware Statutory Trust?

A Delaware Statutory Trust allows multiple investors to own fractional beneficial interests in institutional-quality investment real estate.

Instead of owning an entire building yourself, you own a percentage of a trust that owns the property.

In my case, I own approximately a 1% beneficial interest in a DST that owns a professionally managed self-storage facility in Gainesville, Florida.

Professional managers handle virtually everything:

• Leasing
• Maintenance
• Repairs
• Property management
• Accounting
• Capital improvements
• Daily operations

For me, this solved one of the biggest frustrations of being a landlord.

No more emergency phone calls.

No more fixing broken pipes.

No more worrying whether tenants will renew their lease.

I remain invested in commercial real estate without many of the day-to-day responsibilities that come with direct ownership.

Why Self-Storage?

People often ask why I chose self-storage.

Every real estate sector has risks, but I liked that self-storage often benefits from life’s major transitions.

People rent storage units when they:

• Move
• Downsize
• Get married
• Divorce
• Inherit property
• Send children to college
• Relocate for work
• Grow their businesses

While there are no guarantees, I appreciated that demand isn’t tied to just one segment of the economy.

The Rules That Make a 1031 Exchange Work

A successful 1031 exchange requires careful planning.

One of the most important steps is hiring a Qualified Intermediary (QI) before the sale closes.

This is critical.

If you take possession of the sale proceeds—even briefly—you can lose eligibility for tax deferral.

Instead, the Qualified Intermediary holds the proceeds and facilitates the exchange according to IRS rules.

Timing is equally important.

After selling your investment property, you generally have:

• 45 days to identify potential replacement properties in writing.
• 180 days from the sale to complete the purchase of the replacement property (or properties), subject to IRS rules. And you have to be on the lookout for tax traps; for example, if your 180 days from last year's sale overlap tax day, you would need to file an extension on your tax return to get the full 180 days.

Miss either deadline, and the exchange can fail.

Another important consideration is value and debt. If your goal is to fully defer taxes, the replacement property generally should be of equal or greater value than the relinquished property, and you’ll generally need to replace the debt that was paid off (or contribute additional cash to make up the difference). These are areas where a qualified tax advisor can help determine what applies to your specific situation.

This is why assembling the right team is so important.

A successful exchange typically involves coordination among your:

• Qualified Intermediary
• CPA or tax advisor
• Attorney (when appropriate)
• Financial advisor, ideally one that is a fiduciary and does not get paid commissions from any products they sell >>ask Marc what you could save
• Real estate professionals

Good planning often begins months before a property is ever listed for sale.

What Happens When My DST Is Eventually Sold?

Unlike owning a property forever, most Delaware Statutory Trusts are designed with a long-term business plan. Eventually, the sponsor sells the property.

When that happens, I’ll receive my proportionate share of the sale proceeds.

At that point, I have choices.

I can receive the proceeds, recognize the taxable gain, and pay any applicable taxes.

Or I can complete another 1031 Exchange and continue deferring taxes into another qualifying investment property.

Right now, I already have a vision for what that next chapter might look like.

My Next Dream

This time, I don’t want another one-year lease residential tenant situation.

.

I want something that creates memories.

I’ve been researching lakefront vacation homes in destinations that offer both strong tourism and four-season recreation.

Some of the areas I’m exploring include:

• The Pocono Mountains
• Niagara Falls and nearby lake communities
• Other lakefront destinations with boating, hiking, skiing, and year-round appeal

The idea isn’t simply to maximize investment returns. It’s to own a property that pays for much of itself through short-term rentals while giving my family a place we can occasionally enjoy together.

Imagine owning a lakefront home where guests come throughout the year for:

• Boating
• Kayaking
• Fishing
• Swimming
• Hiking
• Fall foliage
• Skiing
• Snowboarding
• Holiday getaways

For much of the year, the property could operate as a professionally managed Airbnb or vacation rental.

When it’s available—and in compliance with applicable IRS rules governing personal use of investment property—my family could enjoy it ourselves.

To me, that’s an incredible combination.

A real investment.

A family retreat.

A place to build memories.

My Three-Option Strategy

One of the lessons I’ve learned from investing is that flexibility creates better decisions.

Instead of becoming emotionally attached to one property, I plan to identify multiple potential replacement properties during the exchange process.

Today, my thinking looks something like this:

Option 1: The Pocono Mountains

This is currently my favorite.

It’s close enough for weekend trips from New Jersey, offers lakes in the summer, skiing in the winter, and attracts visitors from New York, New Jersey, and Philadelphia throughout the year.

Option 2: Niagara Region

Niagara Falls attracts millions of visitors annually, and the surrounding lake communities offer beautiful scenery, wineries, outdoor recreation, and year-round tourism.

Option 3: Another Delaware Statutory Trust

Every investment plan needs a backup plan.

If I don’t find the right lakefront property…

If prices become too expensive…

If the numbers simply don’t make sense…

I can potentially complete another 1031 exchange into another professionally managed Delaware Statutory Trust, assuming a suitable offering is available.

Sometimes the smartest investment isn’t buying something immediately. Sometimes it’s having the discipline to wait for the right opportunity.

Why This Matters Today

Housing affordability has changed dramatically over the past decade.

Many first-time homebuyers are purchasing homes later in life than previous generations.

Higher home prices, elevated interest rates, insurance costs, and property taxes have changed the economics of real estate ownership.

That doesn’t mean real estate is no longer an attractive investment.

It simply means investors have more choices than ever before.

Some investors prefer direct ownership.

Others prefer Delaware Statutory Trusts.

Some enjoy actively managing vacation rentals.

Others prefer professionally managed commercial real estate.

There isn’t one “best” solution.

There’s only the solution that’s best for your goals, your lifestyle, and your tolerance for risk and responsibility.

My Biggest Takeaway

Selling my Parsippany condominium wasn’t about walking away from real estate.

It was about redefining what real estate meant to me.

The first chapter taught me how to build equity.

The second chapter taught me the value of passive ownership through a Delaware Statutory Trust.

I hope the third chapter combines the best of both worlds—a lakefront vacation home that serves as both an investment and a place where my family can create lifelong memories.

For me, that’s what thoughtful financial planning is all about.

Not simply chasing the highest return.

Not simply minimizing taxes.

But designing a financial life that gives you more freedom, more flexibility, and more time with the people you love.

I love the concept of staying at an Airbnb, but every summer I spend a fortune on one.  It's possible I might have an available option that pays for itself!

Instead of buying a timeshare that is almost sure to lose value, how about we build our own with the goal that it pays for itself?

Buying a second home can require a massive outlay of cash, but with my future proceeds from my 1031 exchange, I'll have a nice down payment for my vacation rental property home. And if I need extra funds for a down payment, I can utilize my tax-advantaged liquidity strategies.

If after several years I find being a landlord is no longer for me, I can sell the rental and 1031 exchange back into a passive DST, and continue to defer the taxes, with the goal of maximizing wealth through tax mitigation no matter whether I want to continue being a landlord  >>learn more about DSTs

Important Disclosure: Delaware Statutory Trust (DST) investments are private securities offered pursuant to exemptions from SEC registration and are generally available only to investors who meet applicable eligibility requirements. Many DST offerings require investors to be accredited investors, which generally means having a net worth exceeding $1 million (excluding the value of a primary residence) or annual income exceeding $200,000 individually ($300,000 jointly with a spouse or spousal equivalent) for each of the past two years, with the expectation of similar income in the current year. Not all DST offerings have the same investor requirements. DST investments are illiquid, involve risks, including the possible loss of principal, and are not suitable for every investor. Investors should consult their financial, tax, and legal advisors before investing.

This article describes my personal investment experience and is provided solely for educational purposes. It should not be considered tax, legal, accounting, or investment advice. Section 1031 exchanges and Delaware Statutory Trusts involve complex IRS rules, deadlines, eligibility requirements, and investment risks. Tax deferral is not guaranteed and depends on satisfying all applicable legal requirements. Personal use of replacement property acquired through a 1031 exchange is also subject to IRS guidance and should be carefully planned. Always consult with qualified tax, legal, and financial professionals before implementing any real estate or tax strategy. AI was used to assist in the creation of this article.