Who was Michelle, and what was her situation?

At around 70 years old, Michelle owned a townhome in the Pinebrook neighborhood near Kimball Junction in Park City, Utah. She had managed it for decades—driving through snow, juggling tenants, and paying ever-rising HOA, maintenance, and insurance bills. She also carried a mortgage covering half the property’s value, and she hated debt. By 2025, she was worn down by the grind. Michelle sold the property to Todd and Sarah in June 2025 and started looking for a smarter way forward.

What financial challenges was she facing?

On paper, Michelle had rental income—but in reality, the property was holding her back:

• Her tenants were paying below-market rents.

• Her insurance premiums were climbing due to the high-fire-risk zone.

• Her HOA dues crept up every year.

After paying her debt service, Michelle was left with just a few hundred dollars a month—and it was being fully taxed.

She also faced another issue: after 30+ years of ownership, she had fully exhausted her depreciation benefits. That meant her income had no shelter. And because her mortgage was recourse debt, she carried the risk of personal liability if things went wrong. Michelle despised debt but didn’t know how she could ever escape it.

What solution did she discover with a DST?

Michelle sold her townhome for $750,000. After paying off roughly $300,000 of recourse debt, she was left with $450,000 in equity. When she connected with a representative at Iron Ridge Advisors, she discovered that a 1031 exchange into Delaware Statutory Trusts (DSTs) could completely change her financial picture.

Here’s what shifted:

• She replaced her recourse debt with non-recourse debt, protecting her personal assets.

• She turned her equity into roughly $1,875 per month in potential income ($22,500 annually), equal to about a 5% annual return.

• She more than doubled her cash flow compared to what she was making before.

• She gained access to a fresh depreciation schedule, which—according to her CPA—would allow her to shelter about 75% of her DST distributions from taxes, while also eliminating the headaches of maintenance and property management.

• She walked away from tenants, toilets, insurance headaches, and rising HOA dues.

• She reinvested tax-deferred into a passive investment, creating the retirement “mailbox money” she had been looking for.

• By holding her DSTs for five to seven years, she could also potentially benefit from capital appreciation. Based on averages from prior DSTs over the last five years, that could add another 6–8% annually, making her total potential return closer to 11–12% per year.

How did this affect her legacy planning?

Michelle’s move wasn’t just about her retirement—it was about protecting her family’s future:

• Her heirs will inherit individual DST shares, preventing family disputes.

• Those DST shares will receive a step-up in basis, eliminating deferred capital gains taxes.

• She created a simplified, tax-efficient legacy plan that can carry forward for generations.

What was the outcome for Michelle?

Michelle traded snow blowers, landscape contractors, late-night tenant calls, broken toilets, and debt she despised for true mailbox money in retirement. With non-recourse debt protection, the potential for more than double her income, fresh depreciation shielding about 75% of her DST distributions from taxes, and the chance to benefit from long-term appreciation, she gained peace of mind. Her wealth is preserved, her estate is simplified, and her family’s future is potentially more secure.

Disclaimer: This case study is based on an actual client story; however, certain details and numbers have been modified for illustrative and educational purposes. Past performance is not indicative of future results. Potential income, tax benefits, and appreciation are not guaranteed and may vary. Investors should consult with their own tax and legal advisors regarding their specific situation.