When a client brings appreciated real estate to a financial advisor, the conversation typically begins as a 1031 exchange. Private real estate investing for advisors typically requires solving multiple objectives at once: maintaining tax deferral through the transition, reducing management responsibilities, retaining estate-planning flexibility, and lowering concentration risk, all within IRS deadlines.

Identifying a platform that addresses all four objectives is often more challenging than evaluating the investment itself. The expertise tends to be siloed. A 1031 specialist may close the exchange but not manage the transition. A DST sponsor may offer passive ownership but limited exit pathways. Quality access can also narrow at smaller account sizes. Resolving the client's objectives within a single structure requires a platform designed for the entire transition.

This case study follows an advisor through a Mid-Atlantic transaction that addresses all four objectives within one structure.

The Client Scenario

Client Snapshot

A Mid-Atlantic property owner approached his advisor about selling an appreciated multifamily asset he had held for over a decade. The client made his objectives clear: he wanted to transition from active ownership into stable passive income, but he was unwilling to accept the federal tax consequences of a taxable sale:

• 23.8% long-term capital gains tax on appreciation*
• Up to 25% depreciation recapture tax*
• Potential additional state tax exposure on the full gain*

_{*Figures reflect the highest applicable federal rates under current law and assume the client is in the top long-term capital gains bracket and subject to the 3.8% Net Investment Income Tax. Actual rates vary by income and state of residence.}

After years of managing tenants, capital projects, and day-to-day operations, he wanted to preserve real estate exposure without the operational responsibility.

He also wanted to:

• Preserve tax efficiency at transition
• Reduce single-asset concentration risk
• Retain estate planning flexibility for heirs

For the advisor, the challenge was identifying a structure that could satisfy all of the client's objectives simultaneously, within IRS deadlines and within a single coordinated platform.

Evaluating Real Estate Investment Pathways

To evaluate each pathway against the client's objectives, the advisor compared the three most conventional real estate investment options and the Bonaventure solution across six dimensions: tax deferral, passive management, exact equity matching, diversification, future liquidity, and estate planning benefit.

_{* Post-721 liquidity is provided through BMIT's share redemption program on a quarterly basis. Redemptions are subject to program limits and board discretion and are not guaranteed.}

Each conventional pathway addressed only a subset of needs and would have required the advisor to coordinate execution across multiple sponsors, intermediaries, and planning specialists:

• Direct 1031 exchange: Defers taxes but recreates the operational burden and single-asset concentration that the client wanted to exit
• Standard DST: Provides passivity but locks the client into another sponsor-controlled 5-10 year cycle with limited diversification or liquidity pathways
• Taxable sale: Eliminates future complexity but reduces reinvestable capital by approximately 20-30% of sale proceeds (or 30-40% of total gain) after federal and state taxes, depending on the state of residence and depreciation history

None of these conventional pathways resolved every requirement within a single coordinated structure. This led the advisor to consider Bonaventure's integrated 1031-to-721 solution: a multi-pathway platform designed to handle the entire transition under one operator.

The Integrated Solution

The Acquisition

The advisor worked with Bonaventure to structure a custom 1031 exchange into a 121-unit multifamily property built in 2011 in a high-growth Mid-Atlantic market.

Transaction details:

• Purchase price: ~$42M
• In-place debt: ~$29.8M
• Client 1031 equity contribution: ~$9.1M
• Closing date: November 2023

Deal Metrics At A Glance

The client acquired a fractional ownership position alongside Bonaventure's own principal capital invested in the same transaction, aligning the operator's interests directly with the client's.

The Structural Advantage

The defining feature of the transaction was a built-in 721 UPREIT transition designed into the structure at inception.

After a minimum two-year hold period in the replacement property, beginning at the November 2023 closing, the client would have the option to contribute the ownership interest into Bonaventure Multifamily Income Trust (BMIT®), the firm's perpetual-life multifamily REIT.

That structure addressed all four of the client's objectives simultaneously:

• Immediate 1031 tax deferral
• Transition into passive ownership
• Reduced single-asset concentration risk
• Long-term estate planning flexibility

The Due Diligence Considerations

Before recommending the structure, the advisor evaluated sponsor alignment, operational execution, and the compliance-relevant track record of the platform.

Publicly disclosed Bonaventure metrics included:

• $1.6B in 1031 exchanges facilitated across 42 completed transactions, demonstrating institutional experience navigating the time-sensitive and structurally complex requirements of like-kind exchange transactions.
• $600M+ in principal capital invested across the platform, meaning the firm has substantial money invested in the same deals as outside investors, creating stronger alignment around capital preservation and underwriting discipline.
• 92.6% fixed-rate debt structure across the portfolio, reducing sensitivity to rising borrowing costs and helping stabilize portfolio cash flow over long hold periods compared with portfolios that rely more heavily on floating-rate debt.
• 24.0% average realized IRR (net of fees) across completed full-cycle investments.
• 2.8x average realized equity multiple (net of fees), meaning investors historically received nearly three dollars back for every dollar invested.

Transaction Timeline

The transaction unfolded in five stages:

• Day 0: Relinquished property closed
• Months 0-6: 1031 replacement period under IRS deadlines (45 days to identify, 180 days to close)
• Months 6-30: Fractional ownership in replacement asset
• Month 30: Client becomes eligible to contribute ownership interest into BMIT via 721 UPREIT exchange
• Month 30+: Following contribution, diversified passive ownership through BMIT becomes available, with continued tax deferral and access to quarterly liquidity windows

How the Structure Addressed the Client's Objectives

The integrated structure addressed each of the client's original objectives within a single long-term planning framework.

1. Transitioning Into Passive Income

The client's primary objective was to replace active ownership responsibilities with stable passive income.

As of May 2026, shortly before the anticipated 721 contribution, BMIT reported the following metrics:

• Three-year annualized net return: 7.9%
• Annualized dividend yield: 5.2%

Depreciation flowing through the structure also sheltered a portion of the income, improving after-tax yield without requiring additional planning coordination.

2. Preserving Long-Term Tax Deferral

The structure maintained tax efficiency through both transitions. The 1031 exchange deferred federal capital gains and depreciation recapture, the 721 UPREIT carried the deferral forward without triggering a taxable event, and BMIT's perpetual-life structure eliminated the need to repeat 1031 exchanges every 5-10 years.

3. Reducing Single-Asset Concentration Risk

Initial fractional ownership reduced single-property exposure immediately. The subsequent 721 UPREIT contribution then transitioned the client into diversified exposure across 24 properties, 4,498 multifamily units, and multiple Mid-Atlantic and Southeast markets, reducing dependence on the performance or exit timing of any single asset.

4. Supporting Long-Term Estate Planning

Under current law, OP units (operating partnership units received in the 721 UPREIT exchange) inherited at death may receive a stepped-up basis under Section 1014, potentially eliminating decades of accumulated deferred capital gains and depreciation recapture liability. For clients focused on multi-generational wealth transfer, the long-term value of uninterrupted compounding and deferred tax elimination can materially exceed the benefits of any single transaction-level strategy.

Implications for Private Real Estate Investing for Advisors

Private real estate investing for advisors is most effective when the platform supports multiple client outcomes across tax deferral, diversification, passive income, and estate planning, since these strategies typically intersect across decades rather than within a single investment cycle.

Platforms limited to a single structure typically require advisors to coordinate across multiple sponsors, intermediaries, and planning specialists, increasing operational complexity and execution risk. Multi-pathway platforms reduce that fragmentation by supporting continuity across initial acquisition, transition events, and long-term ownership.

This applies across advisory contexts. Whether managing a concentrated position for a single high-net-worth client at a solo or boutique RIA, structuring a recurring exchange program for a mid-market advisory firm, or coordinating a family-office-level transition across multiple assets and heirs, the underlying need is the same: a platform that can meet the client where they are and follow the investment through its full lifecycle. For financial advisors, Bonaventure's offerings are available through select broker-dealer relationships, with each firm conducting its own due diligence and approval.

Fit Within A Broader Portfolio

Apart from the specifics of any single transaction, advisors typically evaluate how a private real estate allocation fits within the client's broader portfolio across three dimensions: how it correlates with existing public market holdings, how it fits the client's illiquidity budget, and how the position is sized relative to the overall portfolio.

• Correlation to public markets. Private multifamily has historically shown lower correlation to public stocks and bonds than the broader equity market. For advisors building diversified client portfolios, that means a multifamily allocation can deliver real estate exposure without rising and falling in lockstep with the traditional equity and fixed-income holdings already in the portfolio.
• Illiquidity budget. Most advisors limit how much of a client's portfolio sits in illiquid investments, since clients still need access to capital for ongoing needs. Private real estate is illiquid by structure, but Bonaventure's pathway from DST ownership into BMIT opens up quarterly redemption windows after the 721 UPREIT contribution. That partial liquidity gives advisors more room to include private real estate without breaching the client's overall illiquidity limit.
• Allocation sizing. The right size of a private real estate position depends on the client's net worth, income needs, and existing exposures. Some clients are best served by smaller, standardized DST positions; others need custom structuring around larger exchanges. Bonaventure supports both standard DST participation and custom transactions for exchanges of $7 million or more, allowing advisors to match position size to each client's situation.

Bonaventure for Private Real Estate Investing for Advisors

Bonaventure's platform includes 1031 exchanges, Delaware Statutory Trusts, 721 UPREIT transactions, custom transaction structuring, direct co-investments, and Bonaventure Multifamily Income Trust (BMIT).

For advisors, this is paired with sponsor diligence packages, quarterly client-facing reporting, structural scenarios across 1031, 721, and basis step-up outcomes to bring to their tax counsel, and coordinated execution with qualified intermediaries, CPAs, and estate counsel.

Explore how Bonaventure supports private real estate investing for advisors across the full ownership lifecycle.

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