Why One-Size-Fits-All Planning Around Real Estate Gains Can Be a Costly Oversight

Not long ago, one of our advisor partners introduced me to a client who was preparing to close on a sizable real estate transaction. While the sale itself was a financial win, it also came with significant tax consequences. His regular income was modest, and this transaction stood to create a substantial spike in his tax exposure.

As we reviewed the situation together, a common challenge surfaced — one I see far too often: the immediate assumption that a 1031 exchange is the only answer.

1031 Exchanges Are a Powerful Tool — But They’re Not the Only One

A 1031 exchange is often the go-to strategy for deferring capital gains taxes on real estate, and in many cases, it’s a smart and effective move. But when it becomes the only option on the table — especially when it’s presented without a broader analysis — the client may be missing out on better alternatives or combinations of strategies that are more aligned with their goals.

For this client, we needed to look beyond just “how to do a 1031,” and ask whether a full 1031, a partial exchange, or even other planning strategies might serve his long-term objectives more effectively.

Avoiding Bias: Clients Deserve Objective Guidance

It’s important to recognize a common dynamic in the industry: some advisors, often with good intentions, tend to default to recommending investment portfolios structured around real estate — including DSTs, REITs, or other managed real estate vehicles.

These may be appropriate in certain scenarios. But too often, recommendations are shaped more by product familiarity or business incentives than by a clear understanding of the client’s unique financial picture.

That’s not how we operate at Collective VFO.

We Don’t Sell Investments — We Educate and Coordinate

If it becomes appropriate for a client to consider a professionally managed real estate solution, we never make the recommendation directly. Instead, we connect clients with licensed financial advisors who specialize in these strategies, and we make sure those advisors:

• Are strategic partners we’ve vetted
• Engage in transparent due diligence
• Present options clearly and objectively, with client needs at the center

Too many legacy real estate portfolios have suffered from poor oversight, misaligned incentives, or outdated approaches. That’s why any discussion of managed real estate must be grounded in education and transparency — not in a one-size-fits-all pitch.

Tight Timelines Mean Limited Options — Unless You Plan Ahead

One critical aspect of the 1031 exchange is the 45-day identification window after closing. If a client intends to roll gains into a new property they plan to manage themselves, that timeline can become stressful fast — especially if the ideal property isn’t readily available.

In these cases, having access to professional guidance and backup options can reduce pressure and expand the planning conversation. Whether it’s a self-managed property or a solution through a licensed advisor, the client deserves to know what’s possible.

It’s Rarely Either/Or — Planning Should Be Layered and Diversified

The most effective outcomes often come from a combination of strategies:

• Maybe a partial 1031 makes sense.
• Maybe another portion of the proceeds is better served by a post-sale tax strategy.
• Maybe the client’s goals — lifestyle, estate planning, income needs — call for a broader discussion altogether.

That kind of layered planning can’t happen when an advisor is working alone.

This Is Why the Collective VFO Model Exists

Too many advisors operate in silos — making decisions in isolation, disconnected from the client’s CPA, attorney, or other professionals. That’s where costly mistakes happen.

At Collective VFO, we bridge those gaps. We bring the right professionals to the table — including the client’s existing advisors when possible — and ensure every strategy is built around the client’s full financial life.

We don’t sell products.
We don’t push one-size-fits-all answers.
We design clarity, coordination, and confidence.

Let’s Make Your Next Real Estate Decision a Strategic One

Contact us today to explore layered planning strategies that align with your goals and give you confidence in every transaction.