1031 Reverse Exchange

[Mike B.]

Hey BP: I'm a little foggy on the step by step process of performing a 1031 reverse exchange, and I'd appreciate some feedback. Here's my situation: My sister and I will be joint-venturing to purchase a commercial MF building this year. I need to sell a SFH that I own to help fund this deal, and for which I have a sizable gain. I don't like the idea of doing a forward exchange whereby I sell the SFH and then have a 45/180 day timeframe to close on the replacement property. To me this provides an incentive to buy an average deal just to fulfill the terms of the 1031. As such I'd like to pursue a reverse exchange, but have some questions about the overall process as well as the difference between a replacement property parked reverse exchange and a relinquished property parked reverse exchange.

What I'm having trouble with is how, in the relinquished property parked reverse exchange, things happen generally.  Here are some questions:

1. At what point do I relinquish title of the SFH to the EAT? After an AO on the MFH? At the closing table?

2. How does the EAT/Exhanger/QI apply the funds of the eventual sale of the SFH to the already purchased MFH?

Do you have an opinion as to whether or not one is generally more favorable/cost effective than the other?