721 Exchange Minimum Investment & Suitability

Almost always, yes. These are private securities offerings, and the sponsors limit them to accredited investors. If you own appreciated investment property with meaningful equity, you likely qualify already. We verify it as the first step.

An assessment by a financial professional (through the broker-dealer) of whether the 721 exchange (and the specific offering) is appropriate for you. Securities regulations require that securities be recommended only when suitable, so the professional reviews your financial situation, investment objectives, risk tolerance, time horizon, liquidity needs, and other holdings to determine fit. It's a substantive assessment (not a formality) that protects investors from unsuitable recommendations. So you'll go through this review as part of doing a 721 exchange, ensuring the strategy fits your circumstances and goals.

Your financial situation (income, net worth, assets), investment objectives (income, growth, diversification, estate planning), risk tolerance (ability and willingness to bear the risks — illiquidity, the one-way nature, market/valuation risk), time horizon and liquidity needs (since the investment is illiquid and long-term), and your other holdings and overall circumstances. The review comprehensively assesses these to determine whether the 721 exchange fits you. So it's a thorough assessment of your circumstances and goals, ensuring appropriateness before the strategy is recommended.

The securities offerings involved (DSTs, REIT interests) typically have minimum investment amounts, varying by offering (often set at levels appropriate for accredited investors, sometimes tens of thousands of dollars or more). However, for most 721 exchangers (exchanging appreciated property worth substantial sums), the minimums aren't a barrier — their exchange amount far exceeds them. So there's a minimum, but it generally doesn't exclude typical 721 candidates whose property values are substantial. Your financial professional can tell you the minimums for specific offerings.

Generally accredited investors (meeting the income or net-worth thresholds) for whom the strategy is suitable (passing the suitability review based on their circumstances and goals). Most property owners considering a 721 exchange (owning substantial appreciated real estate, with aligned goals) meet both — their real estate equity and income often qualify them as accredited, and their goals (passivity, diversification, estate planning) align with the 721's benefits. But some may not qualify (not meeting accreditation, or the strategy not being suitable). So qualification requires accreditation and suitability.

Typically by providing documentation of your income or net worth — e.g., tax returns, W-2s, or financial statements showing your income, or statements showing your net worth (assets minus liabilities, excluding your primary residence) — or through third-party verification (by a CPA, attorney, or verification service). Your financial professional guides you on the required documentation for the specific offering. So having your income and net-worth documentation ready facilitates the accreditation verification. The verification confirms you meet the accredited-investor thresholds before accessing the securities offerings.

The typical 721 exchange paths (via DSTs and securitized REIT offerings limited to accredited investors) may not be available to you. So if you don't meet the accreditation thresholds, you may not be able to access the securities-based 721 exchange. Alternatives (like a standard 1031 exchange into a property you buy directly, which doesn't involve securities) might be available instead. So accreditation is a gating requirement for the securities-based 721 paths — if you don't qualify, discuss alternatives with your advisor. Many property owners do qualify, but accreditation is required for these securities offerings.

Because securities regulations require that securities be recommended only when suitable for the investor, to protect investors from unsuitable recommendations. The 721 exchange (via securities) has characteristics (illiquidity, the one-way nature, market/valuation risk, REIT dependence) that aren't appropriate for everyone, so the suitability review ensures the strategy fits your situation before it's recommended. So the review is a regulatory and investor-protection requirement, ensuring the 721 exchange is offered only when appropriate. It protects you by confirming the strategy fits your circumstances and goals.

Yes — if the 721 exchange isn't appropriate for your circumstances, the suitability review would conclude it's not suitable, and it shouldn't be recommended. For example, if you need liquidity the illiquid investment can't provide, or the risks don't fit your situation, or your goals don't align with the strategy, the review might find it unsuitable. So the review can determine the 721 exchange isn't right for you, which protects you. This is a feature, not a flaw — the review ensures you don't enter an unsuitable strategy. If it's not suitable, your advisor should recommend against it.

Gather accreditation documentation (income or net-worth records), and be prepared to discuss your financial situation, investment objectives, risk tolerance, time horizon, liquidity needs, and other holdings openly with your financial professional. Being clear about your goals (why you want a 721 exchange) and honest about your circumstances helps the professional assess fit accurately. Engaging a knowledgeable financial professional to guide you through the process is key. So preparation involves having your documentation ready and being ready to discuss your circumstances, facilitating a smooth accreditation and suitability process.

We help you navigate the accreditation and suitability requirements — guiding the accreditation verification, conducting the suitability review (assessing whether the strategy fits your situation and goals), explaining the minimums, and helping you understand the requirements. REIT units, DST interests, and related securities are offered through our broker-dealer (Aurora Securities, member FINRA/SIPC), and any recommendation is made only after a suitability review. We recommend the strategy only when it fits your circumstances and goals.

The accredited-investor definition includes meeting income thresholds (income above a specified level in recent years) or a net-worth threshold (net worth above a specified level, excluding your primary residence), among other qualifying criteria (some professional certifications also qualify). The specific thresholds are defined by securities regulations and can be checked with current sources or your financial professional. Most owners of substantial appreciated real estate meet the net-worth threshold (their real estate equity and other assets often exceed it). Your financial professional verifies whether you meet the criteria as part of the process, so you don't have to determine it alone — they confirm your accreditation.

Yes — the suitability requirement is an investor-protection measure. It ensures securities are recommended only when appropriate for your circumstances, protecting you from being placed in an unsuitable strategy (e.g., one that's too illiquid for your needs, too risky for your tolerance, or misaligned with your goals). So the review works in your favor — it's a safeguard, not just a hurdle. A good financial professional uses the suitability review to genuinely assess fit and will recommend against the 721 exchange if it's not right for you. So the suitability requirement is designed to protect you, ensuring the strategy fits before it's recommended.

The accreditation and suitability requirements primarily apply at the time of investment (when you enter the securities offering). After the 721 exchange, you hold the OP units (and later potentially REIT shares), with the ongoing considerations being the tax reporting (the K-1), the holding and conversion decisions, and monitoring your investment — rather than recurring accreditation/suitability reviews. However, if you make additional securities investments (e.g., further DST or REIT investments), those would have their own suitability reviews. So the main accreditation/suitability requirements are at entry, with ongoing investment management and tax considerations afterward, which your advisor and CPA help with.

The minimum typically applies per offering — each DST or REIT offering has its own minimum investment. If you're spreading your exchange across multiple offerings (e.g., multiple DSTs for diversification), each would have its minimum, but your total exchange amount (your property's value) is generally divided among them in amounts meeting each minimum. For typical 721 exchangers (with substantial property values), meeting the per-offering minimums across several offerings isn't usually a problem. So the minimums are per-offering, and your exchange amount is allocated across the offerings you choose, each meeting its minimum. Your advisor helps structure the allocation to meet the minimums while achieving your diversification goals.

Yes — trusts and entities can qualify as accredited investors under certain criteria (e.g., a trust with assets above a threshold and a sophisticated trustee, or an entity with sufficient assets or owned entirely by accredited investors), among other qualifying conditions. So if your property is held in a trust or entity, that trust or entity may qualify as the accredited investor for the 721 exchange. The specific criteria for entity accreditation are defined by securities regulations. Your financial professional and attorney help confirm whether your trust or entity qualifies and how it affects the 721 exchange structure (which must also satisfy the same-taxpayer-type considerations). So entities and trusts can participate if they meet the accreditation criteria.