Our Process

A 1031 exchange is not a shopping trip. Before we show you a single property, we work the exchange math, your income needs, and your deadlines into a diversification plan — then assemble a portfolio of Delaware Statutory Trusts designed around it.

Step 1 — We start with your exchange math

Every plan begins with four figures from your relinquished sale, because they constrain everything that follows:

Step 2 — How many DSTs should you own?

There is no single “right” number, but the decision is driven by competing forces: diversification pushes the count up; investment minimums ($25,000–$100,000) push it down; the 45-day identification rules shape the list; and each position is a separate K-1 and full-cycle event to track.

As a general framework — not a recommendation — most exchanges we work on land between three and six DST positions, with larger or more complex exchanges supporting more. We also identify backup properties within the 45-day rules so a single sponsor closing cannot derail the exchange.

Why backups matter. Availability moves — a program you identify on day 10 can fill before you fund. We build identification lists with that reality in mind, using the 200% rule where appropriate, so your exchange has redundancy rather than a single point of failure.

Step 3 — The diversification framework

Once the position count is set, we diversify deliberately across several independent axes — not just “different buildings,” but different sources of risk:

Sponsor Spreading across managers so no single operator dominates the portfolio.

Sector Balancing income-oriented sectors (net-lease, medical) with growth-oriented ones (multifamily, industrial).

Geography Avoiding concentration in a single market or region.

Leverage Matching the debt you need to replace, and blending leveraged with debt-free positions.

Business Plan Core/stabilized income vs. value-add, and the role each plays.

Vintage & Hold Staggering expected hold periods so full-cycle events do not all arrive at once.

Step 4 — Matching debt — or going debt-free

If your relinquished property carried a mortgage, replacing that debt is usually necessary to avoid a partial taxable event. DSTs carry property-level, non-recourse financing, so your share of a leveraged DST's debt counts toward your replacement requirement. Where an investor prefers no new debt, debt-free (all-cash) and low-leverage programs can be used instead. We model the blended leverage so your debt replacement lands where it needs to — not by accident.

Step 5 — Illustrative portfolios

The scenarios below are hypothetical illustrations of how a diversified plan can be structured — not recommendations, offers, or projections, and not based on any specific investor or current availability.

Scenario A — Income-focused retiree

Allocation Weight

Net-lease retail (debt-free) — defensive, lease-driven income 30%

Multifamily — core, inflation-sensitive 25%

Medical / healthcare — demographically driven demand 25%

Industrial / logistics — long leases, credit tenants 20%

$600,000 equity · no debt to replace · debt-free preference · long hold. 4 positions, 4 sponsors; no single sector above ~30%.

Scenario B — Debt-replacement exchange

Allocation Weight

Multifamily (leveraged) — carries replacement debt 30%

Industrial (leveraged) — carries replacement debt 25%

Net-lease retail — income ballast 20%

Self-storage — short-lease inflation hedge 15%

Medical — defensive income 10%

$1.2M equity · ~$480k debt to replace (≈40% leverage). 5 positions, 5 sponsors; blended leverage tuned to the debt to be replaced.

Scenario C — Estate-planning, long horizon

Allocation Weight

Multifamily — two sponsors/markets 28%

Industrial — two programs 22%

Net-lease retail — income 18%

Medical 12%

Self-storage 10%

721 / UPREIT-eligible program — future liquidity optionality 10%

$3.0M equity · step-up focus · optionality valued. 7–8 positions, 6+ sponsors; staggered holds; a 721-eligible sleeve preserves a path to REIT units.

Scenario D — Smaller exchange

Allocation Weight

Multifamily — core anchor 40%

Net-lease retail — different sponsor & tenant base 35%

Industrial or medical — third sector where minimums allow 25%

$250,000 equity · mindful of minimums. 2–3 positions; diversification constrained by $25k–$100k minimums.

Step 6 — Identification & deadline strategy

The 45-day clock is unforgiving, so identification is a strategy, not a formality. Depending on the exchange we use the three-property rule (name up to three, any value) or the 200% rule (name more, capped at twice the relinquished value) to build in backups, and we sequence funding so the highest-conviction positions close first.

Step 7 — Ongoing stewardship

The plan does not end at closing. We track each position toward its full-cycle event, watch sponsor reporting, and help you plan the next move — another exchange, a 721 UPREIT roll where eligible, or a different allocation as your goals change.

Jerry Baker

Founder & Managing Principal, Baker 1031 Investments · FINRA Series 22 / 63 · SIE

Jerry founded Baker 1031 to bring institutional underwriting discipline to the 1031 exchange. He spent more than a decade on Wall Street working on $10B+ of real estate before building diversified DST portfolios for individual investors. Read full bio ➞

Reviewed by Lori Kamen — Chief Compliance Officer, Aurora Securities, Inc. (FINRA CRD #2805591). Last reviewed July 12, 2026. Securities offered through Aurora Securities, member FINRA/SIPC.

Securities offered through Aurora Securities, Inc. (ASI) — CRD #46147, SEC #8-51322 — member FINRA/SIPC. Gerald F. 'Jerry' Baker, III is a registered representative of ASI (FINRA CRD #7537416). Baker 1031 Investments, LLC is independent of ASI and is not a registered broker-dealer or investment adviser. This page is informational only and is not an offer to sell or a solicitation of an offer to buy any security, or tax or legal advice; any offer is made solely through a sponsor's private placement memorandum following a suitability determination. DST and related securities are speculative and illiquid, for accredited investors only, and involve substantial risk including possible loss of principal.

1031 Exchanges

DSTs

721 / UPREITs

Opportunity Zones

Mineral & Royalty Interests

REITs

This page is educational and is not investment, tax, or legal advice or an offer to sell or a solicitation to buy any security. Offerings are available only to accredited investors and are made solely through a sponsor’s private placement memorandum. Securities offered through Aurora Securities, member FINRA/SIPC. Real estate investments involve risk, including possible loss of principal.