Property type
Multifamily
Educational overview for 1031 exchange planning. Not investment advice.
Category: ResidentialmixedAsset class: Residentialfee_simpledstfund
Overview
Multifamily properties are residential rental properties with five or more units, including garden apartments, mid-rise, and high-rise buildings.
General characteristics
Multifamily can be held directly (active management) or through DSTs and funds (passive).
Potential benefits
- Recurring monthly rental income\n- Generally non-correlated with single-tenant risk\n- Multiple tax depreciation strategies available
Potential risks
- Local market and vacancy risk\n- Capital improvement costs\n- Interest rate sensitivity for leveraged ownership
Management requirements
Direct ownership requires active management or a third-party property manager. Passive DST ownership delegates management to a sponsor.
Liquidity considerations
Direct: low (months to sell). DST: very low.
Tax considerations
Generally eligible as like-kind for 1031 exchange when held for investment. Consult your CPA.
Common investor profiles
Owners seeking diversified residential exposure with monthly cash flow.
Educational information only. The content on this page is general education and is not tax, legal, accounting, or investment advice. Consult your own CPA, attorney, and licensed investment professionals before making any decision related to a 1031 exchange or Delaware Statutory Trust.