One common strategy is “trading up” — for example, an Benefits of 1031 Exchange For Investors who owns a small apartment building may exchange into a retail strip centre with multiple tenants. This not only defers capital gains taxes but also spreads risk across different tenants and income streams. Another approach is consolidating properties — selling several smaller assets and rolling them into one larger property, such as a medical office building, which can provide more stable, long-term leases.