Context

A retirement-age couple in the East Bay had owned a duplex since 1998. The property had cash-flowed well for most of the hold, but by 2024 the tenants had gotten more complicated. Two unit turnovers in eighteen months, a rent-control conversation they didn't want, and a rising sense that their adult children did not want to inherit a property-management role. Their listing broker had been having the 'next year' conversation for two cycles.

They had roughly $1.6M of equity in the property, with a small remaining mortgage of $180K. Their income goal in retirement was about $5,000–$7,000 per month on top of social security and a small pension. They wanted the money out of active management, not out of real estate entirely. And they wanted to set up whatever they did now so that, at death, their kids inherited the holdings with a stepped-up basis under current law, eliminating the deferred gain.

What we did

Week 1: Alignment across advisors
We coordinated an initial call with the couple, their CPA, their estate attorney, and a senior LRC coordinator. The estate attorney raised a structural question early: did the couple want to hold the replacement property in their revocable living trust (simpler, but triggers trust re-titling mid-exchange) or transfer after the exchange cleared? We deferred to the attorney and structured around her recommendation.
Week 2–4: Replacement design
The couple's stated income goal and their age profile pointed us toward lower-leverage DSTs with stabilized tenants and monthly distributions, not toward value-add structures that back-load returns. We built a candidate portfolio across two DSTs: one Class B multifamily in a Sun Belt metro, one medical office DST backed by investment-grade tenants. Both had hold periods in the 6–8 year range.
Week 5–17: Execution
Relinquished property sold in late summer. QI received proceeds. Identifications filed on day 31 of the window. Both replacements closed within three weeks of identification.
Week 18 onward: Stewardship
Distributions began in the first full month after closing. We continue to meet with the couple and their advisors quarterly to review performance, discuss any sponsor-level material changes, and update their CPA on reporting needs.

Numerically

Relinquished
East Bay duplex, 24-year hold
Sale price
$1.85M
Net proceeds
~$1.6M
Structure
2 DSTs: Class B multifamily (Sun Belt) + medical office (national)
Estimated tax deferred
~$420K
Year-one blended cash distribution
In line with current market ranges for the two asset classes (actuals vary)
Estate structure
Held in revocable trust, step-up anticipated at death of second spouse under current law

Why it worked

The couple's priorities were emotional before they were financial. They wanted done with tenants, and they wanted their kids not to inherit a headache. The numbers supported that, but the structure was designed around the emotional outcome. Choosing lower-leverage DSTs with stabilized tenants over higher-projected value-add was a deliberate match to their profile, not a default.

Footnote

All three case studies are composite, anonymized illustrations based on transaction patterns and structures LRC 1031 has coordinated. Names, exact dates, specific sponsors, and distinguishing property details have been altered or removed. The mechanics described (basis calculations, deferral categories, 45/180-day windows, DST structures) are factually accurate under current law. Every exchange is different: each seller's basis, depreciation, tax bracket, state, and estate plan change the specific numbers. Past transactions are not indicative of future results. DST investments carry risk including complete loss of principal, are illiquid, and are available only to accredited investors. Nothing here is tax, legal, or investment advice.