The Johnson family sold their debt-free farm for $2,500,000 in cash. They were referred to a real estate broker who suggested they acquire one single tenant net leased property. After a period of time identifying and negotiating the purchase of quick serve restaurant, the Johnson’s attorney found a number of onerous subordination, substitution, and cancellation clauses in the lease.

Results without Using a DST:

After a week of negotiations with the seller, the attorney was not able to remove these unfavorable clauses from the lease.  As a result, the Johnson’s decided to cancel the contract.  They were now down to 5 days left in the 45-day identification period.  Thinking they did not have enough time to search for new properties, make offers, and complete due diligence, the Johnson’s were prepared to pay taxes of $725,000 on the sale.

Results using a DST:

Within two days, using the DST structure, the Johnson’s were able to identify five high quality DST’s with multiple properties in multiple states for $500,000 each. This enabled the Johnsons to defer $725,000 in taxes and relieved them of a lot of stress.  And, they were more strategically diversified so that their entire investment was not dependent on the success or failure of one property and one tenant.