The Essential 1031 Exchange Team: Who You Need, What They Do, and How the Entire Process Actually Works in Los Angeles
By Justin Borges, The Borges Real Estate Team
A successful 1031 exchange requires a coordinated team of five core professionals: a qualified intermediary (legally required to hold proceeds), a tax advisor who understands exchange strategy beyond basic filing, a real estate agent who coordinates timelines and identifies replacement properties, a lender experienced with investment property financing, and—when needed—property managers or DST advisors for passive income strategies. After coordinating over 200 exchanges in Los Angeles County, I've learned that the real estate agent serves as the quarterback who keeps everyone aligned with IRS deadlines and ensures you don't lose your tax deferral.
A 1031 Exchange Isn't Hard… If You Have the Right Team
In my 13 years helping LA investors execute 1031 exchanges, I've seen deals fall apart for the same reasons:
- The CPA didn't understand depreciation strategy
- The agent missed the 45-day identification deadline
- The qualified intermediary wasn't proactive with communication
- The lender slowed everything down during underwriting
- Nobody coordinated the moving parts
- Everyone assumed someone else was handling the timeline
A 1031 exchange is a team sport. With the wrong team, you risk:
- Your tax deferral (the entire point of doing this)
- Your depreciation reset (critical for cash flow)
- Your 45-day identification window (strict IRS deadline)
- Your 180-day completion timeline (no extensions)
- Your peace of mind (and potentially hundreds of thousands in taxes)
Over my career, I've closed over $200 million in real estate transactions and maintained a 106% average list-to-sale price ratio. But 1031 exchanges? They're a different beast entirely. They require precision, coordination, and a team that actually communicates.
In this guide, I'll break down every professional you need, what they actually do, how they coordinate with each other, and where I fit into the process as your advisor and quarterback.
The Qualified Intermediary (QI): The Non-Negotiable Player
Let me be direct: Without a qualified intermediary, your exchange is invalid. No QI = no 1031 = immediate tax liability. Understanding the full IRS requirements helps you see why the QI role is legally mandated, not optional.
What the QI Does:
A qualified intermediary isn't optional—they're legally required. Here's their role:
- Holds your sale proceeds so you never "touch" the money (IRS requirement under Section 1031)
- Manages the legal structure of the exchange documentation
- Receives your property identification within the 45-day window
- Prepares IRS documentation (Form 8824 and exchange agreements)
- Coordinates with escrow, title, and your CPA on timing and compliance
- Tracks your deadlines so nothing slips through
- Ensures IRS compliance at every stage
Why QIs Matter Even More in Los Angeles
LA escrows are notoriously unpredictable, and I see this constantly:
- Tenants delay delivering the property vacant
- City inspections take 3-4 weeks longer than expected
- Unexpected repairs surface during buyer inspections
- Rent roll verification drags on for rent-controlled properties
- Buyers take longer to close in this market
A great QI helps you navigate these moving parts without blowing your deadlines. The wrong QI? They'll wait for you to call them on Day 44 of your 45-day window.
How I Work With Your QI
When we work together on your exchange, here's what I handle:
- Choosing the right QI for your situation (most people pick based on price alone—big mistake)
- Coordinating the initial exchange setup before your property goes on the market
- Ensuring timely identification submission with all required documentation
- Confirming all deadlines are tracked and communicated to escrow/title
- Making sure nothing falls through the cracks during the chaotic closing period
The Tax Advisor/CPA: The Most Undervalued Member of the Team
I'll say this as directly as I can: Most CPAs do not specialize in 1031 exchange strategy.
They may file your taxes accurately. They may be great at bookkeeping. But 1031 exchanges require someone who understands depreciation recapture, boot calculations, passive loss carryforwards, and how to structure exchanges around specific tax goals.
What the Right CPA Does:
Here's what you need from a tax advisor during a 1031 exchange:
- Calculates your capital gains exposure (federal and California)
- Determines depreciation recapture liability (often overlooked)
- Evaluates passive loss carryforwards that could offset gains
- Reviews your Schedule E for the past 3-5 years
- Advises on entity structure (LLC, trust, individual ownership)
- Helps structure partial cash-out exchanges legally
- Works directly with your QI on documentation timing
- Ensures tax filings match exchange paperwork (Form 8824)
Why the CPA Matters Specifically in LA
Los Angeles investors face unique challenges:
- Below-market rents on long-term tenants (especially rent-controlled units)
- High equity with low cash-on-cash returns (asset-rich, cash flow-poor)
- Rent control restrictions limiting income potential
- Aging buildings with deferred maintenance eating into NOI
Your CPA should help you determine: Is a 1031 exchange actually your best move, or should you take the tax hit and deploy capital differently?
Sometimes the math says "sell and pay taxes." A good CPA tells you the truth.
How I Work With Your CPA
I provide your tax advisor with:
- Detailed property financials (rent roll, expenses, NOI, depreciation schedule)
- ROI analysis on replacement properties so they can model tax consequences
- Timeline coordination so they have time to review before you identify
- Market context that affects the exchange strategy
I bring the deal reality. They bring the tax consequences. Together, we create the right strategy for your situation.
The Real Estate Agent (Me): The Quarterback Who Coordinates Everything
This is where I come in—and I'm not just your listing agent or buyer's agent. When you're executing a 1031 exchange, I'm the quarterback holding the entire team together.
My Responsibilities in Your 1031 Exchange:
1. Evaluating Your Current Property
Before we even list your property, I run a comprehensive financial analysis:
- Current NOI and cash-on-cash return
- Rent roll analysis (market rent vs. actual rent)
- Depreciation remaining and recapture calculation
- Opportunity cost of staying vs. exchanging
- What-if scenarios for different replacement strategies
This isn't a CMA—it's a full investment analysis that helps determine if exchanging makes sense.
2. Designing the Sales Strategy
Selling during a 1031 exchange requires specific strategies:
- Pricing for multiple offers to maximize your buying power
- Deliver-vacant strategy when possible (faster closings)
- Counteroffers with built-in timeline extensions to protect your 45-day window
- Compliance with rent control laws (RSOS in LA)
- Positioning the asset to attract investor-buyers who understand the property type
3. Pre-Identifying Replacement Properties
Here's what most agents miss: I start identifying potential replacement properties BEFORE we list your current property.
Why? Because waiting until Day 1 of your 45-day window is insane. By the time we have a ratified contract, I've already lined up 8-12 potential replacements and know which ones are realistic.
4. Negotiating the Replacement Property While Your Sale Is in Escrow
This is the critical difference between a smooth exchange and a failed one.
While your downleg (sale) is in escrow, I'm actively negotiating your upleg (purchase). By the time your sale closes and your 45-day clock starts, we're often already in contract on the replacement—or have 2-3 backup options ready.
5. Running Financial Analysis on Every Replacement Property
For every property we consider, I provide:
- Cap rate and cash-on-cash return
- Net operating income (real expenses, not proforma dreams)
- Vacancy rates based on local market data
- Appreciation potential and market trajectory
- Local regulations (rent control, zoning, special assessments)
- Risk assessment for that specific market
No guessing. No "seems good." Just numbers.
6. Coordinating Timelines Across All Team Members
I maintain constant communication between:
- Your QI (deadline tracking)
- Your CPA (tax strategy validation)
- Your lender (underwriting and appraisal timeline)
- Escrow and title (closing coordination)
- Property managers (if buying out of state)
I keep everyone aligned so your exchange doesn't blow up due to miscommunication.
7. Helping You Choose: Local, Multi-State, or DST
Not all replacements are created equal. I help you evaluate:
- California vs. out-of-state properties (tax implications, management, appreciation)
- Direct ownership vs. Delaware Statutory Trusts (active vs. passive)
- Single property vs. multiple properties (diversification vs. simplicity)
My recommendation is always based on your numbers—not hype, not what's "hot," not what some guru is selling.
8. Steering You Away From Panic Decisions
The 45-day window creates artificial urgency. Sellers panic. They overpay. They buy in markets they don't understand. They ignore red flags.
I'm the voice of reason when the clock is ticking. If I don't like a deal at Day 40, I'll tell you—even if it means extending your search or considering a DST as a backup.
My job is to protect your wealth, not just complete a transaction.
The Lender: The Often Overlooked Risk Factor
Here's the truth about lenders: They can make or break your exchange.
Most LA investors don't realize how long financing can take—especially on out-of-state or multi-unit properties.
What the Right Lender Does:
A lender experienced with 1031 exchanges will:
- Pre-approve you BEFORE Day 1 of your exchange
- Review DSCR requirements for investment properties
- Assess income documentation early (W2s, tax returns, liquidity)
- Understand 1031 timing constraints (this isn't a primary residence with 60-day financing)
- Speed up underwriting when necessary
- Communicate directly with your QI on closing coordination
- Close before your Day 180 deadline without drama
How I Work With Your Lender
I ensure:
- You're pre-approved early (ideally before we list your property)
- Financing matches your exchange goals (loan amount, terms, rate locks)
- Appraisals are ordered immediately once in contract
- Underwriting doesn't drift past critical deadlines
- Communication stays active (I follow up weekly during escrow)
I also know which lenders perform well in:
- Out-of-state markets (Alabama, Texas, Arizona, Tennessee)
- Multifamily properties (5+ units)
- Portfolio loans (when you're buying multiple properties)
- DST structures (when applicable)
Choosing the wrong lender can cost you your entire exchange. I don't let that happen.
Property Managers (For Out-of-State Purchases)
If you're exchanging from LA into out-of-state markets (which many of my clients do for better cash flow), the property manager becomes the stabilizing force behind your ROI.
What a Good Property Manager Does:
- Efficient tenant placement (low vacancy)
- Accurate rent comps (realistic income projections)
- Real expense management (not proforma fantasy numbers)
- Maintenance oversight (protects your asset value)
- Monthly reporting (so you actually know what's happening)
- Lease enforcement (evictions when necessary)
- Vacancy minimization (the #1 killer of returns)
How I Work With Property Managers
When we're buying out of state, I:
- Connect you with vetted managers I've worked with before
- Provide local market context they may not share with you
- Ensure the business plan matches reality (not marketing fluff)
- Confirm rent projections are realistic based on current market
- Integrate their numbers into my ROI analysis so you see the real picture
Property management can make or break an out-of-state investment. I don't leave it to chance.
DST Advisors (If You Want Passive Income)
A Delaware Statutory Trust (DST) is for investors who say: "I'm done being a landlord."
It's a fractional ownership structure where you own a piece of institutional-grade real estate (usually multifamily, medical, or industrial) managed entirely by professionals.
What a DST Advisor Does:
- Structures passive replacement options that qualify for 1031
- Explains projected cash flow and distribution schedules
- Navigates SEC regulations (DSTs are securities)
- Helps you exchange into fractional ownership without active management
- Handles compliance and documentation for the exchange
- Provides exit strategy options (though liquidity is limited)
How I Work With DST Advisors
I help you:
- Determine if a DST fits your goals (passive income vs. control vs. liquidity)
- Coordinate with the DST advisor on timing and documentation
- Compare DST returns vs. direct ownership (apples to apples)
- Integrate DST projections into my financial analysis
- Understand liquidity limitations (you're locked in, typically 5-10 years)
I don't sell DSTs—I help you evaluate them as one option among many.
Attorney (Only When Needed)
Not every 1031 exchange requires an attorney. But certain situations do:
- Complex entity structures (multi-member LLCs, partnerships)
- Tenants-in-common (TIC) arrangements
- Probate or trust complications
- Seller financing structures
- Commercial lease negotiations
How I Work With Attorneys
I identify when legal assistance is necessary and coordinate with your attorney on:
- Entity setup before the exchange
- Purchase agreement review (especially for commercial)
- Title issues that could derail the exchange
If you need an attorney, I'll tell you early—not at Day 43 of your exchange window.
How All These Roles Coordinate (And Who Keeps It Together)
Here's the real workflow:
Me → QI → CPA → Lender → Escrow → PM/DST → Me
I'm the beginning and the end of this circle.
Every question eventually comes back to me. Every timeline depends on my coordination. Every decision flows through my analysis.
Because here's the reality: A 1031 exchange isn't just a transaction—it's a strategy with moving parts, strict deadlines, and significant financial consequences.
And I'm the strategist who makes sure nothing breaks down.
Why LA Investors Need a Higher-Level Team Than Other Markets
Los Angeles adds complexity that most markets don't have:
- Rent control (RSOS limits your upside and complicates sales)
- Below-market rents (long-term tenants paying 40-50% under market)
- Slow tenant turnover (deliver-vacant can take months)
- City inspection delays (LARR, SCEP, other compliance hurdles)
- Legal risks (LA tenant protections are the strictest in the nation)
- Higher price points (larger capital gains exposure)
- More emotional sellers (generational properties, family history)
- Complex tax scenarios (California + federal + depreciation recapture)
LA multifamily isn't for amateurs. Neither is a 1031 exchange in this market.
You need a team that understands the actual LA landscape—not a textbook version of how exchanges "should" work.
And that's exactly what I provide.
1031 Exchange Team Comparison: DIY vs. Coordinated
| Approach | Timeline Success Rate | Avg. Replacement Quality | Stress Level | Tax Deferral Risk |
|---|---|---|---|---|
| DIY (No Coordinator) | 60-70% meet deadlines | Often settle for available | Extremely High | Medium-High |
| Generic Agent | 75-85% meet deadlines | Market-rate properties | High | Medium |
| Experienced 1031 Coordinator | 95%+ meet deadlines | Optimal replacements | Low-Medium | Very Low |
*Based on my experience coordinating 200+ exchanges in LA County
The 1031 Exchange Timeline: Who Does What When
Days 0-5: Pre-Exchange Preparation
Me:
- Financial analysis of current property
- Market positioning strategy
- QI selection and setup
- Pre-identification of replacement properties
QI:
- Exchange agreement preparation
- Escrow coordination setup
CPA:
- Tax liability calculation
- Exchange strategy validation
Days 1-45: Identification Period (CRITICAL)
Me:
- Active replacement property search
- Financial analysis on all candidates
- Negotiation on top choices
- Coordination with QI on submission
QI:
- Receives and documents identification
- Confirms compliance with IRS rules (3-property or 200% rule)
Lender:
- Pre-approval on identified properties
- Rate locks if applicable
CPA:
- Reviews identified properties for tax strategy fit
Days 46-180: Acquisition Period
Me:
- Negotiating and closing replacement property
- Coordinating all parties toward Day 180 deadline
- Due diligence and inspections
Lender:
- Underwriting and appraisal
- Loan approval and closing coordination
QI:
- Facilitating closing and fund transfers
- Preparing final exchange documentation
Escrow/Title:
- Processing both transactions simultaneously
Property Manager (if applicable):
- Tenant placement and property takeover
Post-Closing
CPA:
- Form 8824 preparation
- Tax return filing
Me:
- Post-closing follow-up
- Performance tracking on replacement property
Frequently Asked Questions
Do I absolutely need a Qualified Intermediary for a 1031 exchange?
Yes—without a QI, the IRS considers your exchange invalid, and you'll owe immediate capital gains taxes. The QI must be established before you close on your sale, and they legally hold your proceeds during the exchange period. Trying to do a 1031 without a QI is like trying to drive without a license—it's not optional.
Can my regular CPA handle a 1031 exchange if they don't specialize in them?
Your regular CPA can file the paperwork (Form 8824), but if they don't specialize in 1031 exchange strategy, they may miss opportunities or give you incomplete advice. The real value isn't in filing forms—it's in helping you structure the exchange to maximize depreciation, minimize boot, and align with your long-term tax strategy. I've seen exchanges technically succeed but fail financially because the CPA didn't understand the strategy side.
What exactly does the real estate agent coordinate during a 1031 exchange?
I coordinate everything: identifying replacement properties before your 45-day deadline, negotiating while your sale is in escrow, running financial analysis on every option, keeping your QI and CPA in the loop, ensuring your lender stays on schedule, and preventing panic decisions when timelines get tight. Think of me as your exchange project manager—someone has to keep all the moving parts aligned, or the whole thing falls apart.
Do I need a lender lined up before starting my 1031 exchange?
Absolutely—financing delays are one of the top reasons exchanges fail. You should be pre-approved before your property goes on the market, not after you identify a replacement. Out-of-state properties, multifamily buildings, and portfolio loans take longer to underwrite than primary residences. If you wait until Day 30 of your 45-day window to talk to a lender, you're gambling with your tax deferral.
Are Delaware Statutory Trusts (DSTs) safe for 1031 exchanges?
DSTs are SEC-regulated investment products, which means they have oversight—but that doesn't mean they're risk-free. They're best for investors who want completely passive income and are willing to give up control and liquidity for 5-10 years. I help clients evaluate DSTs as one option among many, comparing projected returns, fees, and exit strategies against direct ownership. They're a tool, not a magic solution.
When do I actually need an attorney for a 1031 exchange?
Most straightforward exchanges don't require an attorney beyond what your QI and escrow provide. But you'll want one if you're dealing with complex entity structures (multi-member LLCs, partnerships), tenants-in-common arrangements, probate complications, or commercial properties with complex leases. If you're just exchanging a rental duplex for another duplex, you probably don't need an attorney. If you're exchanging from a trust into a multi-member LLC, you probably do.
What are the biggest mistakes LA investors make during 1031 exchanges?
The three biggest mistakes I see: (1) Not pre-identifying replacement properties before listing—waiting until Day 1 of the 45-day window creates unnecessary panic; (2) Choosing a lender without 1031 experience who doesn't understand the timeline pressure; and (3) Ignoring Los Angeles-specific complications like rent control, LARR inspections, and deliver-vacant challenges that can delay closings. The fourth mistake? Not having someone coordinate all the moving parts—which is exactly why understanding whether a 1031 makes sense for your situation before you start is critical.
About Justin Borges
I'm the founder of The Borges Real Estate Team, based in Pasadena and serving Los Angeles County. Over 13 years in real estate, I've closed over $200 million in transactions and maintained a 106% average list-to-sale price ratio.
I specialize in three areas:
- 1031 Exchanges (helping investors defer taxes and upgrade their portfolios)
- Probate & Trust Sales (guiding families through inherited property sales)
- Architectural Homes (Mid-Century Modern, Craftsman, Spanish Revival, Victorian)
Nearly 60% of my business comes from repeat clients and referrals—a reflection of how seriously I take my role as advisor, not just transactional agent.
If you're considering a 1031 exchange in Los Angeles, let's talk about your strategy before you list. I'll run a full financial analysis, identify replacement property opportunities, and coordinate your team so you don't lose sleep over IRS deadlines.
The Borges Real Estate Team
Pasadena, CA
(323) 684-4421
Justin@theborgesrealestateteam.com
lametrohomefinder.com
Want help with your 1031 exchange strategy? Contact me for a free property analysis and replacement property search.
