Case Study

Case Study for Delaware Statutory Trusts

The case study below is merely provided to demonstrate the 1031 process and potential benefits. Each investor’s experience may be different and past performance is not an indication of future performance. All investing involves risk of loss of some or all principal invested.

Trust Investment Summary

In 1998, Karen and her husband Bob purchased a 12-unit apartment building in San Francisco, California, for $480,000. In March 2021, they sold the property through their real estate broker for roughly $3.3 million.

Their decision to sell the property stemmed from Bob’s impending retirement, coupled with their desire to get away from the responsibilities of active management along with the rules and regulations associated with being a landlord in the state of California. Moreover, they aspired to broaden the scope of their investment portfolio beyond one property in a single location and also hoped to generate more cash flow from their investments.

When their property closed escrow, Karen and Bob embraced the opportunity to invest in Delaware statutory trusts (DSTs). They partnered with our team of qualified professionals to outline a 1031 exchange plan comprised of institutional-quality, professionally managed DSTs that would enable them to defer all capital gains taxes and achieve their investment objectives.

For Karen and Bob, it was “Mission Accomplished.” They successfully completed their 1031 exchange and now own an interest in seven different DST properties with an aggregate value of over $1.2 billion. Their real estate portfolio is now diversified across various sectors, geographic locations, tenants, income sources, and more.

Most importantly, their real estate portfolio is now hassle- and property management-free, which permits them to pursue other, more enjoyable interests.