1031 Exchange Replacement Property Comparison: DSTs, TICs, Rental Property

DSTs (Delaware Statutory Trusts)

Passive, institutional-grade real estate ownership

Overview
A DST allows accredited investors to own fractional interests in large, professionally
managed commercial properties through a trust structure.

Key Advantages
– Fully passive ownership. Sponsor handles all management and reporting
– 1031-eligible replacement property
– Access to diversified, institutional-grade assets
– Pre-arranged, non-recourse financing (removes debt-qualification risk)
Ideal For: Investors seeking predictable income with no management duties.

TICs (Tenants-in-Common)

Co-ownership structure with deeded interests

Overview
TIC investors each own a deeded interest in a single property, sharing decisions,
responsibilities, and financing.

Key Advantages
– 1031-eligible fractional ownership
– Deeded interest may appeal to certain estate strategies
– Access to larger assets than an individual could acquire alone
Important Considerations
– Major decisions often require unanimous consent
– Shared responsibility can create operational friction
– Financing is more complex vs. DSTs
Ideal For: Investors who prefer deeded ownership and shared control.

Rental Property (Active Management)

Direct ownership with full control and full responsibility

Overview
Investors own property outright and handle all management decisions—either directly or
through a property manager.

Key Advantages
– Full autonomy over property decisions
– Ability to reposition, refinance, or value-add
– Can be more potential for appreciation + tax benefits
Common Challenges
– Active involvement in repairs, vacancies, and tenants
– Operational and liability responsibilities rest entirely on owner
– Harder to scale compared to passive institutional-grade options
Ideal For: Investors who want hands-on involvement.