Hi BP Community,

I'm new to the Bigger Pockets community and grateful to learn from all of you.

I am planning on 1031ing my first mixed use commercial building in Los Angeles that I've managed for a few years. The CAP rate on our appreciated equity is very low, given our PITI. I've run the numbers and think we can conservatively double or possibly triple our CoC return out of state.

Since I have to replace the debt from my mortgage in order have a successful exchange, I'm looking at putting some of our cash from the sale into DSTs (Delaware Statutory Trusts) that are leveraged, fractional interest products. I'd be buying equity along with a proportionate amount of debt. One upside of the DST structure is that the acquired debt is the responsibility of the trustee of the DST, not me. These DSTs cash flow at projected rates depending on the asset class and debt load. The more money I place in highly leveraged DSTs, the lower the rate of cash flow. The highest leveraged DSTs return no cash but allow you to acquire lots of debt without becoming a Guarantor.

This is how I plan to free up cash in the exchange to invest in higher CAP rate areas out of California. With this exchange I'm looking to generate passive cash flow so I can pivot into real estate full time. Since I'll be paying cash for properties in the exchange, I'll have a decent amount of equity I can pull out for future investing. I'm looking to start investing in a deliberate, conservative way and look to build passive cash flow, rather than large chunks of money at a time while keeping my debts lower if possible.

Question for the community:

I've seen lots of different plays: Wholesaling, Fix & Flip, Buy & Hold, BRRRR, etc. What kind of play is recommended for someone who has owned and managed, but is new to the world of portfolio building? Secondly, what markets should I be looking in to begin networking?

I really appreciate your feedback and hope I can contribute to the community as well!

Adam