The Pain Point
For many seasoned landlords across Oʻahu—whether they own duplexes in Kailua, single-family rentals in Kāneʻohe, or small apartment buildings in Honolulu—the math no longer adds up.
Monthly rent checks are nice, but come with a price: leaky roofs, midnight plumbing calls, rising insurance costs, tenant disputes, and tighter regulation.
Selling would be a relief… but a tax bill of hundreds of thousands in capital gains and depreciation recapture? That’s enough to keep many owners trapped in landlord limbo.
Unless… they use a 1031 Exchange into a Delaware Statutory Trust (DST)—a strategy designed to provide continued real estate income without the hassle of management.
The Move
Here’s how experienced investors are stepping off the landlord treadmill:
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Engage a Qualified Intermediary (QI) before listing your property or accepting offers. This keeps the 1031 exchange compliant.
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Start due diligence on DST sponsors early. Before your 45-day identification window starts, you’ll want to understand offerings, sponsors, and debt structures.
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Select DSTs aligned with your income goals and risk tolerance. You can split your proceeds across multiple DSTs to diversify your portfolio.
Real Scenarios from Oʻahu Investors
Scenario 1: The Kailua Duplex Owner
A couple in their 60s owns a duplex in Kailua they bought in the 90s. It's now worth $1.2 million. They're tired of managing tenants and want to retire on the Big Island.
They sell, defer their $400,000+ in capital gains taxes using a 1031 exchange, and move their equity into three DSTs:
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A multifamily property in Arizona for monthly cash flow.
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A grocery-anchored retail center in Texas for recession resistance.
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A last-mile logistics facility in California for long-term growth.
Their return: professionally managed assets, monthly income (often distributed quarterly), and zero landlord duties.
Scenario 2: The Honolulu Apartment Owner
An investor owns a small walk-up apartment in town. The rents are steady, but the building needs a new roof, and insurance premiums just spiked. At 70, she’s ready to simplify.
She exchanges into a single DST backed by:
This DST offers her a predictable income, appreciation potential, and none of the capital expenditure headaches.
Scenario 3: The Fix-and-Hold Flipper in Pearl City
A younger investor spent the last decade flipping and holding rentals on Oʻahu. He’s burned out. He sells two properties and rolls the proceeds into DSTs.
But he’s looking for growth, not just income—so he chooses DSTs in:
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Ground-up development multifamily
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Student housing near major universities
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Industrial warehouses in major port cities
He understands these DSTs may have higher risk and longer hold periods, but he's positioning for upside—and letting someone else handle the heavy lifting.
Final Thought
If you're an Oʻahu landlord looking to simplify your life, reduce risk, and maintain income—all while avoiding a massive tax hit—a 1031 into a DST may be the strategy you're looking for.
We help connect you with vetted DST providers and experienced Qualified Intermediaries, so you can transition smoothly and confidently into passive real estate income.
Want to explore DST options tailored to your situation? Reach out for a free consultation—no pressure, just clarity.
