Know the Risks Before You Exchange

Transparency is part of the EZ 1031 Fiduciary Standard. Real-estate investing—including 1031 exchanges—carries meaningful risk. Review the points below with your CPA, attorney, and financial adviser before proceeding.

General Real-Estate Risks

Even the best property can face headwinds you can’t predict or control.

  • Market swings: Vacancy spikes, rent pressure, declining values.

  • Tenant issues: Late payments Defaults, costly evictions.

  • Economic downturns: Reduced demand, tighter credit, slower leasing.

  • Physical events: Fire, storms, or other damage requiring major repairs.

  • Government action: Eminent domain, unfavorable zoning changes, blight designations.

  • Environmental liability: Contamination or other hazards that reduce value and create cleanup costs.

You should invest only what you can afford to lose.

1031 Exchange–Specific Risks

Section 1031’s tax benefits come with strict rules and tight timelines. Missing any of them can void the deferral.

You should invest only what you can afford to lose.

Key Requirement

Risk If Missed

Funds never touch your hands

Taxable sale if you receive or control the proceeds.

Identify replacement property within 45 days

Exchange fails; gain becomes taxable.

Close replacement purchase within 180 days

Same outcome—tax hit on the sale

“Like-kind” and equal or greater debt

Shortfall triggers partial or full tax recognition.

Bottom line: Work closely with qualified tax and legal counsel from Day 0.

Illiquidity of Fractional Interests

Syndicated TIC or DST shares rarely trade on a secondary market, and transfers are often restricted. Align the investment with your cash-flow needs and estate plan before you commit.

Limited Diversification

Most DST or TIC offerings hold one property. Broader diversification requires additional real-estate investments.

No Guaranteed Performance

EZ 1031 Exchange—and any DST sponsor we may introduce—does not guarantee distributions, resale value, or overall returns.

Fees & Expenses

Acquisition, syndication, asset-management, and disposition fees are built into every DST program. Review the private-placement memorandum carefully to understand how those costs may affect performance.

Leverage Amplifies Volatility

Debt can boost returns and magnify losses. Rising interest rates or falling NOI can erode equity and limit refinancing options.

Need a risk run-through for your situation?

Chat with an EZ 1031 specialist, call us at [INSERT HYPERLINK TO PHONE #], chat with us [INSERRT LINK TO LIVE CHAT], or ask your CPA—we’re happy to walk you through the details before you take the next step.

This material is for informational purposes only and is not tax, legal, or investment advice. Always consult qualified professionals regarding your specific circumstances.