Got it ✅ Here’s a full draft blog post (approx. 1,000–1,200 words) built from the outline. It’s written in a clear, authoritative, and slightly skeptical voice, and ends with the required disclaimer so you can use it as October’s feature article.

The Skeptic’s Guide to 1031 Exchanges, DSTs, and 721 UPREITs

Not tax or legal advice. Always consult your advisors before making decisions.

The Basics — 1031s, DSTs, and 721s Explained

Real estate investors who own highly appreciated property often face the same dilemma: how do you reposition or sell without triggering a massive tax bill? Over the years, several tax-deferral strategies have emerged, each with its own benefits and trade-offs. The three most commonly discussed are:

• 1031 Exchange
  The workhorse of tax-deferral strategies. Under Section 1031 of the Internal Revenue Code, you can sell one investment property and roll the proceeds into another “like-kind” property without paying capital gains tax at the time of the transaction. It keeps you in direct ownership — and in the landlord’s seat.
• Delaware Statutory Trust (DST)
  A DST is a vehicle that allows multiple investors to pool their money into fractional ownership of professionally managed real estate. Instead of replacing one property with another, you exchange into a share of a trust that owns institutional-quality assets. You receive distributions, but you have no say in day-to-day operations.
• 721 Exchange / UPREIT
  Section 721 allows property owners to contribute their property to a Real Estate Investment Trust (REIT) operating partnership in exchange for Operating Partnership (OP) units. Over time, those units can usually be converted into REIT shares. This structure — called an UPREIT — is essentially a way to swap property ownership for a stake in a much larger real estate portfolio.

On the surface, all three options promise the same thing: deferral of capital gains taxes. But the way they achieve that — and the trade-offs you accept — are very different.

The Sales Pitch — What Promoters Promise

DSTs and UPREITs have been gaining traction in recent years, particularly among sponsors and REITs who present them as modern alternatives to the “old-fashioned” 1031 exchange. Here’s how they’re typically marketed:

• Diversification
  Instead of being concentrated in one property, investors can spread their equity across dozens or even hundreds of assets in multiple markets and sectors.
• Passive Income
  Say goodbye to tenants, toilets, and trash. Management headaches are gone because professionals run the portfolio. Investors simply collect distributions.
• Estate Planning
  DSTs and 721 exchanges, like 1031s, still benefit from the step-up in basis at death. Heirs often prefer inheriting REIT shares or trust units rather than direct ownership of buildings.
• Liquidity (eventually)
  In a 721 exchange, OP units can eventually be converted into REIT shares, which are publicly traded. That creates a pathway to liquidity that doesn’t exist with traditional real estate.

For investors who are ready to step away from the responsibilities of direct ownership, this sales pitch can sound compelling.

The Skeptic’s View — Red Flags to Watch

But here’s where healthy skepticism is warranted. These vehicles can make sense for some investors — but they are not silver bullets.

• Liquidity Limits
  The promise of liquidity is often overstated. DSTs typically lock investors in for 5–10 years until the sponsor sells. 721 units usually have a lock-up period before they can be converted into REIT shares. Even then, the conversion process can take time, and once in REIT shares you are exposed to public market volatility. For older investors who may need cash quickly for health or lifestyle reasons, this delayed liquidity is a major red flag.
• Loss of Control
  With a 1031, you can always hire a professional property management company and eliminate most day-to-day hassles while retaining control over financing, leasing, and sale timing. DSTs and UPREITs, by contrast, take away that optionality entirely. Investors must accept whatever the sponsor or REIT decides.
• Who Really Benefits?
  Let’s be candid: REITs and DST sponsors often benefit more than the contributing property owner. REITs acquire properties tax-deferred without writing a big check. Sponsors earn fees for managing assets. Investors are left hoping distributions remain steady and property values hold.
• An Alternative Path
  If the goal is to reduce hassle, a 1031 exchange into a stable property with professional management can often accomplish the same thing — without giving up control or liquidity. You still own real estate directly, and you choose when and how to sell, refinance, or reposition.

1031 vs. DST vs. 721 — Which Fits Which Investor?

Here’s a side-by-side comparison to make the trade-offs clear:

                                  1031 Exchange                            DST                               721 / UPREIT                     

|-------------------------------|----------------------------------------|---------------------------------|----------------------------------|

  Control                         High (you choose property; can hire mgmt.)   None                              None                             

  Diversification                 Limited, unless multiple properties       Moderate (pooled assets)         High (broad REIT portfolio)     

  Liquidity                       Very low (must sell/refi)                Very low (until sponsor sells)   Medium (after lock-up → REIT shares) 

  Income                          Rent (net of mgmt. costs)                Regular distributions             Dividends/distributions           

  Estate Planning                 Step-up in basis                         Step-up in basis                 Step-up in basis                 

  Best For…                      Active or semi-active investors who value control & flexibility   Those who want completely passive ownership   Investors who want to move wealth from buildings into liquid REIT shares over time 



Conclusion

DSTs and 721/UPREITs aren’t inherently “bad” — they’re just tools. The key is understanding whether they solve your specific problem better than a traditional 1031.

If your main concern is the hassle of management, you might be surprised at how much a good property manager can do while you retain control and flexibility. If your main concern is liquidity, recognize that both DSTs and 721s often delay it rather than solve it.

For some investors — especially those who want to exit active ownership entirely and don’t mind giving up control — these structures can make sense. For others, particularly those who value optionality, a 1031 exchange into a well-managed property may remain the smarter choice.

Final Note: This article is for educational purposes only. It is not accounting, tax, or legal advice. Always consult your advisors to determine what strategy is right for you.