1031 Exchange in Reverse

[Deanne Bourne]

I looked for advice on this subject about 3 months ago then I had to just jump in and do it. Our San Francisco Bay Area market has become very difficult to find a property. The traditional forward 1031 path of "sell your house and buy another in 180 days" just would not be anything less than completely nerve wrecking. We made offers on 7 houses but could not win the offer. Properties were going at $500k over asking or about 25%. A Reverse 1031 just made sense: qualify for a loan (hard money), find a property, close on it then sell the exchange property and give everything to the Intermediary to sort it out according to the IRS guidelines. There is a great deal to a reverse exchange. You absolutely need a seasoned Intermediary. We talked to several. You get a sense for who is the most knowledgeable when you start asking question like "who is on title for the ownership of the newly purchased property, who signs the loan docs? Who is on the liability insurance and who signs those documents?" Finding a willing lender was also difficult bc they must loan to an LLC . I feel like I can answer some questions on this subject.