1031 Exchange/Deed Swap: Has anyone consolidated rentals through 1031? (non-DSTs)

[Nate Edwards]

I'm exploring the idea of consolidating multiple underperforming rental properties into fewer, more stable ones using a 1031 exchange.

The concept: Trade 3-5 distressed properties (constant repairs, problem tenants, negative cash flow) for 1-2 stabilized properties in better markets - ideally structured as a cashless swap to preserve the tax benefits without using a DST. Would still like to own and control the assets, which from my understanding, DSTs have a 3-7 yr lock up period typically.

Has anyone here actually done something like this?

Specifically curious about:

• Did you consolidate to fewer properties, or just reposition to better markets?
• What were the biggest challenges or surprises?
• How did you find replacement properties willing to do a swap?
• Was the 1031 complexity manageable (any additional legal work required?), or did it become a headache?

I'm trying to figure out if this is a viable strategy or just sounds better on paper than it works in practice. Any experiences (good or bad) would be really helpful.

Thanks in advance!

[Bill B.]

I did one 2 years ago to convert an older property (almost 25 years old.) to a new build. I plan to do another one, if the current tenant ever moves out, from a state with income tax to one without. 

My top hint is start your serious search once your selling property is under contract. Then lock the deal up about a week before closing on sale  (Most sellers are willing to wait one week for your property to close, longer is a big ask.)

Reach out to @Dave Foster here on BP. He helped me with mine. Super simple and relatively cheap process.