Michelle's Park City Townhome: $450K Equity Restructured Into Diversified Passive Real Estate

At around 70 years old, Michelle owned a townhome in the Pinebrook neighborhood near Kimball Junction in Park City, Utah. The property had been a long-time rental, but the math was getting worse every year.

The problems stacking up

Tenants paying below-market rents, locked into older lease structures
Insurance premiums climbing in Wasatch County
HOA dues creeping up every year
Fully exhausted depreciation benefits, after 30+ years of ownership, no more shelter
Carried approximately $300,000 in recourse debt, bank could come after Michelle personally on default

After all expenses, the property was barely covering itself.

The strategy

Michelle sold the townhome for $750,000. After paying off the $300,000 recourse mortgage, she had $450,000 in equity.

Instead of taking cash and paying capital gains on a property she’d held for decades, she executed a 1031 exchange into a Delaware Statutory Trust (DST) portfolio.

The outcome

Replaced recourse debt with non-recourse debt, no more personal liability on real estate
Structured for the potential of mailbox money, not guaranteed, varies by sponsor, property, and market
Fresh depreciation on her DST share is designed to potentially shelter a portion of distributions from current taxes
Eliminated property management responsibilities, no tenant calls, HOA meetings, or insurance battles
Created tax-efficient legacy planning with stepped-up basis for heirs

What changed for Michelle

She went from:

Recourse debt with personal liability → non-recourse, off-balance-sheet
Below-market rents she couldn’t easily raise → diversified institutional real estate exposure
Exhausted depreciation → fresh depreciation potential
Active landlord work → fully passive

Real names and exact numbers were not used. The concept reflected here is illustrative. Potential income, tax benefits, and appreciation are not guaranteed and may vary. DST 1031 properties are available only to accredited investors. Investments involve risk including loss of principal.