Middle Door HomesMiddle Door Homes
Classic brick apartment building courtyard

For property owners

Turn your real estate equity into a diversified portfolio.

Contribute your building. A passive stake in a professionally managed, diversified portfolio: no tax event, no management from day one.

0%*

Taxes at closing

30,000+

Units of experience

8-12%

Target annual return

* §721 exchanges are non-recognition events for federal income tax purposes. Individual tax outcomes depend on cost basis, depreciation history, holding period, and state of residence. Consult your CPA.

You've spent years building a concentrated real estate position with significant embedded gains. Selling means surrendering 30-40% of that value to capital gains and depreciation recapture. The alternative has always been to hold, concentrated in the same single asset. Middle Door Homes offers a third path.

The tax problem

Long-term owners carry decades of appreciation. Selling triggers capital gains and depreciation recapture, often costing 30-40% of the building's value.

Operational drag on returns

Small multifamily buildings require constant attention: tenant calls, aging systems, deferred maintenance. At some point, the active management burden stops being worth the return on your time and capital. You built this as an investment, not a job.

No clean exit from operations

A 1031 exchange defers taxes, but requires identifying a replacement property in 45 days and closing in 180. You're not exiting active operations; you're just changing which building you're running.

The solution

A 721 exchange, not a sale

A 721 exchange is an IRS-approved strategy that allows you to contribute your building to a professionally managed portfolio, in exchange for a passive ownership stake, with no taxable event at closing.

You do not sell. Your equity moves forward intact into a diversified, professionally operated portfolio.

The key distinction

A 721 exchange is a contribution, not a sale. The tax event that would occur at sale is deferred, so you keep 100% of what you have built.

Why not a 1031 exchange?

A 1031 also defers taxes, but you face a 45-day identification window and 180-day closing deadline, and you end up managing a new building. A 721 exchange has no deadlines and no replacement property. You contribute once and exit active ownership permanently.

Tree-lined street with classic brick multifamily buildings

How returns are generated

We create value first. Then we take our stake.

MDH doesn't manage contributed buildings passively. We evaluate each property for value-creation potential and deploy capital where it generates the most impact: higher NOI, improved occupancy, and where the building allows, additional units for incremental cash flow.

Building-level capital review

We assess every contributed building for capital improvement opportunities. Where improvements generate measurable returns, MDH arranges renovation financing and executes: systems upgrades, unit renovations, and where feasible, additional units created for incremental cash flow. No capital required from you.

Promote tied to performance

MDH earns its ownership stake only when value creation is confirmed by NOI growth. If the renovation doesn't generate measurable improvement, MDH doesn't take its equity stake. That alignment is structurally different from any other vehicle where the GP takes fees and promotes regardless of what they deliver.

The alignment

We get paid when we make your asset more valuable. Not before. If the renovation does not generate confirmed NOI improvement, MDH does not take its equity stake.

Compare your options

How a 721 exchange stacks up

Self-manageHire PMSale1031DSTMiddle Door
No tax event at transition✓✓✗✓✓✓
Exit active operations completely✗✗✓✗✓✓
Ongoing upside participation (vs. fixed distributions)✓✓✗✓✗✓
Diversified portfolio exposure✗✗✗✗✓✓
Renovation capital & value creation provided✗✗✗✗✗✓
Purpose-built for small multifamily✗✗✗✗✗✓

Middle Door is the only structure that clears all three: no tax event at contribution, complete exit from active management, and ongoing upside participation. Every other option trades at least one away.

DST = Delaware Statutory Trust. DSTs defer taxes but require a 1031 exchange process, use a blind-pool structure with fixed distributions and limited upside, and offer no redemption mechanism. Hiring a property manager reduces but does not eliminate active ownership: owners remain responsible for capital decisions and pay 8-10% of gross rents regardless of performance. 1031 exchanges defer tax but require identifying a replacement property within 45 days and closing within 180, and you remain an active operator afterward.

What you receive

A tax-efficient transition to passive income

Tax deferral & estate planning

No capital gains or depreciation recapture at closing. Your full equity basis rolls forward intact. OP units can pass to heirs with a step-up in cost basis, potentially eliminating the deferred tax liability entirely.

Continued ownership with upside

You own a passive LP stake in a diversified, professionally managed portfolio, with ongoing cash distributions and participation in portfolio appreciation over time.

Truly passive income

Operational responsibility transfers completely at close. Institutional-grade management handles tenants, maintenance, leasing, and compliance. You receive distributions, not work orders.

Structured liquidity post-lockup

After an initial lockup period, structured semi-annual redemption windows give you flexibility as your financial needs evolve.

How 8-12% compares

Balanced advisor portfolio

~5-7% annually - but starting with 60-70 cents on the dollar after you sell and pay taxes to reallocate.

Keep managing the building

Similar or lower returns - with full operational responsibility and concentrated single-asset risk.

MDH 721 exchange

8-12% target return on 100% of your equity - no tax haircut at contribution, no management burden.

Working with us

How institutional management grows portfolio income

Many small multifamily owners are not capturing the full NOI potential of their buildings. Deferred maintenance, below-market rents, and high operating costs compress returns year after year.

Institutional-grade management drives cash flow improvement through expense reduction, rent optimization, and operational efficiency, passing that upside to you as a passive LP.

Institutional management delivers ~20-50%+ incremental cash flow at scale, the same playbook applied across the Middle Door portfolio.

Classic brick brownstone apartment stoops

Qualifying

Is this a fit for you?

MDH works best if:

  • ✓You own one or more multifamily buildings in the 2-49 unit range
  • ✓You've held long enough to have meaningful embedded gains
  • ✓You're ready to exit active operations, but the tax cost of a sale is too high
  • ✓You likely qualify as an accredited investor; most long-term multifamily owners do (net worth over $1M excluding primary residence, or income above $200K)
  • ✓Your mortgage is moderate relative to the building's value

It's probably not the right fit if:

  • -You need immediate, unrestricted liquidity
  • -Your building carries a high mortgage relative to its current value
  • -You want a short-term exit rather than a long-term passive investment
  • -The illiquid nature of a private partnership does not fit your financial situation

The best way to find out is a conversation. There's no cost, no obligation, and we'll give you an honest answer.

Process

Step by step

01

Conversation

We discuss your building, your financial situation, and your goals. No obligation. We want to understand if the model is genuinely a good fit.

02

Evaluation

We assess the building and structure the exchange terms. You get full transparency on your passive ownership stake and what to expect.

03

Contribution

You contribute the building via 721 exchange, not a sale. Not a taxable event. Your existing mortgage is paid off at close. Your equity moves forward intact.

04

Ongoing income

You receive quarterly distributions from a diversified portfolio. Our team manages all operations, working to grow NAV and income over time.

The owner experience

What happens after you contribute

On close, title transfers to the Operating Partnership and your OP units are issued. Your equity is now a passive stake in a diversified, professionally managed portfolio. The first quarterly distribution hits your account. That is the entire job from here.

Quarterly distributions

Regular passive income from the portfolio, paid after operating expenses, debt service, and capital reserves, subject to portfolio cash flow.

Annual K-1 tax schedules

You continue to receive pass-through tax treatment as an LP, including your allocable share of depreciation from the portfolio's properties.

Audited financial statements

Annual audited financials and quarterly portfolio reports covering occupancy, capital improvements, and market conditions, with full transparency into what you own.

Nothing to manage

Tenants, maintenance, leasing, compliance: all transfer at close. You become a passive LP on day one.

Common questions

Frequently asked questions

The 721 Exchange

What is a 721 exchange?+
A 721 exchange (also called an UPREIT contribution) is an IRS-approved strategy that lets you contribute real property to an Operating Partnership in exchange for OP units: a passive ownership stake in the partnership. It is a contribution, not a sale, so no taxable event occurs at closing.
How is a 721 exchange different from a 1031 exchange?+
A 1031 exchange also defers taxes, but requires you to identify a replacement property within 45 days and close within 180, and you end up managing a new building. A 721 exchange has no identification window, no deadline, and no replacement property. You contribute once and exit active ownership permanently.
Is this a sale?+
No. You are contributing your building to the Operating Partnership in exchange for OP units. Because it is a contribution rather than a sale, no capital gains tax or depreciation recapture is triggered at closing.
Do I need to be an accredited investor?+
Yes. OP units are securities and this offering is limited to accredited investors: generally those with a net worth over $1M (excluding primary residence) or annual income above $200K ($300K joint). We can walk you through the requirements.

Tax & Structure

What taxes do I defer?+
Both federal long-term capital gains (typically 20%) and depreciation recapture (25% rate on prior depreciation) are deferred at closing. Your equity rolls forward intact. State taxes vary by location.
What happens to my deferred taxes eventually?+
Deferred taxes become due when you sell or redeem your OP units. However, OP units can be passed to heirs with a step-up in cost basis, which can eliminate the deferred tax liability entirely for the next generation.
What is my ongoing tax treatment as an OP unit holder?+
You continue to receive pass-through tax treatment. You receive a K-1 each year reflecting your allocable share of income, deductions, and depreciation from the portfolio's properties.
What happens to my mortgage?+
Your existing mortgage is paid off at closing from the contribution proceeds. Only your net equity moves forward as OP units.

The Process

What does the process look like from start to finish?+
We start with a conversation about your building, financial situation, and goals. If it looks like a fit, we assess the building and structure the exchange terms. You review a full term sheet with your advisors. If you proceed, we close the contribution. Title transfers, your mortgage is paid off, and your OP units are issued. From that point forward, you are a passive investor.
How long does the process take?+
Typical timeline from first conversation to close is 60-90 days, depending on due diligence complexity and third-party timelines. We move as efficiently as possible.
Do I need my own attorney or CPA?+
Yes, and we encourage it. This is a significant financial transaction and you should have independent counsel review the terms. We will provide full transparency on the documents and work cooperatively with your advisors.

Returns & Income

What return can I expect?+
We target 8-12% annualized returns through distributions and portfolio appreciation. For context, a typical balanced advisory portfolio returns 5-7% annually, and that's after you've already surrendered 30-40% of your capital to taxes to get there. The 721 exchange lets your full equity basis work from day one. Returns are not guaranteed and depend on portfolio performance, occupancy, operating expenses, and market conditions.
How are distributions paid?+
Distributions are paid quarterly, after operating expenses, debt service, and capital reserves. The timing and amount will vary with portfolio cash flow.
How does my income compare to what I earn now?+
Most long-term owners are not capturing full income potential: deferred maintenance, below-market rents, and high operating costs reduce returns. Professional management typically drives 20-50%+ incremental cash flow at scale, which can mean meaningfully higher passive income than you are earning today.

Liquidity & Exit

Can I get my money out?+
OP units are not publicly traded and are illiquid for an initial lockup period of approximately 2-3 years. After lockup, structured semi-annual redemption windows provide flexibility, but liquidity is not guaranteed on demand. This is a long-term investment.
What are the risks I should understand?+
Real estate investment carries real risk. Property values can decline, occupancy can fall, and returns are never guaranteed. The portfolio is geographically focused, so a broad market downturn would affect returns. Performance depends on MDH's execution. Past experience is not a guarantee of future results. We want you to go in with clear expectations.
What if I change my mind after contributing?+
Once you contribute, the building belongs to the Operating Partnership and cannot be returned. OP units can be redeemed in semi-annual windows after the lockup period, but you should treat this as a long-term commitment going in.

This is illustrative only and does not constitute an offer to sell securities. Actual tax liability depends on your individual circumstances. Consult a qualified tax and legal advisor before making any decisions.

You built something real. Let's make sure it keeps working for you.

No obligation. We start with a conversation to understand your building and your goals, and give you an honest answer on whether a 721 exchange is the right fit.

Start the conversation