Many people who are considering a reverse 1031 exchange want to know how to get the money to finance their exchange. There are two ways to finance a reverse 1031 exchange.
Out of Pocket vs. Lender Financing
The first option for financing your reverse exchange is to advance the funds out of pocket. The other option is for you to arrange for financing with your lender.
Pros & Cons
If you use bank financing, the exchange company signs the note and mortgage on a non-recourse basis, and you guarantee the debt or cosign the loan. This applies if you are parking the ownership of the replacement property. However if you are parking the ownership of the relinquished property, then the financing with the bank is less complicated.
- 1031 Hotline: If you have questions about reverse exchange financing, feel free to call me at 612-643-1031.
Defer the tax. Maximize your gain.
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