Every tired landlord arrives at the same fantasy: the rent checks keep coming, and the 2 a.m. plumbing calls stop. The industry has a name for the fantasy — “mailbox money” — and a stack of products engineered to sell it. Some of them are legitimate tools. All of them look better in the brochure than in the fine print.
Here’s every major way to go passive, what each one actually costs you, and the questions to ask before your money gets locked up.
Talk it through first: Call (214) 203-9192. Johnny Borrelli, Investment Adviser Representative — there’s no charge for a first conversation.
You buy a fractional interest in a trust that owns institutional-grade property — apartments, industrial, medical office. It’s the most common passive replacement in 1031 exchanges, and it can close in days, which helps inside the 45-day identification window. (Full DST guide here.)
The fine print: illiquid, typically for years, with no redemption. Sponsor risk — you’re betting on the operator. Fee loads. Distributions can be cut when the property underperforms. Loan maturity inside the structure is your problem even though you have no control over the refinancing. Generally limited to accredited investors.
Direct fractional ownership of the property itself, with up to 35 co-owners. More control than a DST — you actually hold title — but more complexity, and unanimous consent is often required for big decisions.
The fine print: still illiquid. Still exposed to the property’s debt and operating risk. The governance friction is real when 35 strangers have to agree.
A later step, not a starting move: after holding DST or other property, you can contribute it to a REIT’s operating partnership in a Section 721 exchange, ending up with operating partnership units — and eventually REIT shares. It’s the path from passive to liquid.
The fine print: it’s a one-way door with its own tax mechanics, and the REIT’s performance becomes your performance.
You own the building; a corporate tenant pays rent plus taxes, insurance, and maintenance. As close to passive as direct ownership gets.
The fine print: you’re concentrated in one tenant and one lease. If they leave or default, you own an empty box. Still your property, still your problem — just quieter most years.
Liquid and diversified. But a REIT sale is generally a taxable event — it doesn’t pair with a 1031 exchange the way DST and TIC interests do.
Sometimes the most passive real estate is no real estate. Pay the tax, take the cash, and build the income stream from something you never have to unclog. It deserves a seat at the table in every comparison.
Most passive real estate education comes from the people selling passive real estate. That’s a structural conflict, and it shows in what’s emphasized and what’s buried. Johnny Borrelli is an Investment Adviser Representative. The job is to lay every option on the table, including “don’t do any of them,” and help you choose with your actual numbers in front of you.
Call Johnny Borrelli, Investment Adviser Representative: +1 (214) 203-9192. A first conversation maps your options — DST, TIC, UPREIT, triple-net, or out entirely — before you commit to any of them.
The main options are Delaware Statutory Trusts (DSTs), tenant-in-common interests (TICs), 721 UPREIT exchanges, triple-net leased properties, and REITs. Each trades control for convenience differently — and each carries risks the marketing skips, including illiquidity and sponsor risk.
Yes. DST and TIC interests are structured to qualify as like-kind replacement property in a 1031 exchange, and a 721 UPREIT exchange can follow later. The 45-day identification and 180-day closing rules still apply in full.
The big ones: illiquidity (your money is typically locked up for years with no redemption), sponsor and operator risk, fee loads that reduce returns, distribution cuts when properties underperform, and loan maturity or refinance risk inside the structure. They are generally limited to accredited investors.
Yes — because the passive options are usually presented by the people selling them. A balanced review compares DSTs, TICs, UPREITs, triple-net, and simply selling outright against your timeline, income needs, and estate plan, before you commit. Disclosure: Johnny Borrelli is a Registered Representative of Crescent Securities Group and may receive compensation — including selling commissions — if you invest in a securities product through him. Ask for his Form CRS for details on how he is compensated.
This page is for educational purposes only and does not constitute tax, legal, or investment advice. Passive real estate investments involve risk, including illiquidity and loss of principal. Consult your tax adviser, attorney, and financial professional before making decisions. Johnny Borrelli is a Registered Representative of Crescent Securities Group, member FINRA/SIPC, and an Investment Adviser Representative of Crescent Advisor Group, an SEC-registered investment adviser. CRD #6788697.
Running the numbers first? Use the capital gains tax calculator to estimate your exposure. Exiting California? Read the California-to-Texas exchange guide and the Prop 13 and recapture breakdown. In North Texas, see financial planning in Frisco.
Educational conversation: DST, TIC, UPREIT, triple-net, or out — mapped against your numbers.
(214) 203-9192