Reverse 1031 Exchange Bridge Loans
Buy your replacement investment property before selling your current one.
When the right investment opportunity comes along, you may not want to wait for your current property to sell. A Reverse 1031 Exchange combined with LendSure Bridge Financing can help you access your existing equity and move forward with your next investment.
We’ve got the key to
your new home.
Buy Before You Sell
Secure the replacement investment property you want without waiting for your current investment property to sell first.
Access Your Equity
Tap into equity from your departing investment property to help fund the purchase of your replacement property.
No Doc, Investor-Friendly
A non-QM construction loan for builders, investors, self-employed borrowers, and LLCs. No income documentation required.
No Monthly Bridge Payments
Maintain more financial flexibility during the transition with no monthly payments required on the bridge loan. Interest accrues during the bridge period, and the bridge loan is repaid when the departing property is sold.
What Is a Reverse 1031 Exchange?
A Reverse 1031 Exchange changes the order. Instead of selling first, you purchase the replacement property before selling the departing investment property. This can provide more flexibility when you’ve already found the right investment opportunity but haven’t yet sold your existing property.
During a Reverse 1031 Exchange, a qualified intermediary (QI) provides an Exchange Accommodation Titleholder (EAT), typically an LLC, that temporarily holds title to the replacement property while the exchange is completed.
Importantly, on a Reverse 1031 Exchange, the executed exchange documents must be in place before the purchase, and if not, the purchase will not be a valid replacement for the following sale of the relinquished property.
The challenge is accessing the money needed for the replacement purchase while your equity is still tied up in the departing property. LendSure’s Bridge Loan can provide access to that equity before the property sells, helping you move forward with your replacement purchase.
- Rental property investors
- Real estate portfolio investors
- Investors purchasing 1–10 unit properties
- Short-term rental investors
- Investors expanding real estate portfolios
A Reverse 1031 Exchange may be worth exploring if:
- You’ve found a replacement investment property before selling your current one
- You don’t want to lose an investment opportunity while waiting for a sale
- You have substantial equity in your existing investment property but need liquidity for your next purchase
- You want more time to improve, market, or prepare the departing property for sale
- You’re considering a 1031 Exchange but the timing works better for you to purchase first
Important: Tax-related information on this page should not be construed as tax or legal advice. Borrowers should always consult qualified tax, legal, and exchange professionals before initiating an exchange transaction.
HOW IT WORKS
How Does a Reverse 1031 Exchange Work?
1. Engage a Qualified Intermediary
Work with a qualified intermediary to establish the Reverse 1031 Exchange structure and Exchange Accommodation Titleholder before purchasing the replacement property.
2. Find Your Replacement Property
Identify the investment property you want to purchase before your current investment property has sold.
3. Access Your Existing Equity
LendSure’s Bridge Loan can tap the equity in your departing investment property to help fund the down payment on your replacement property. Existing liens on the departing property are paid off through the bridge financing.
4. Finance and Purchase the Replacement Property
The bridge loan and new purchase loan can be pre-approved simultaneously and close on the same day. With the exchange structure in place, the EAT temporarily holds title to the replacement property while the Reverse 1031 Exchange is completed.
5. Identify and Sell Your Departing Property
The departing property must generally be formally identified within 45 days of acquiring the replacement property and sold within 180 days.
6. Complete the Exchange
Once the departing property is sold, the proceeds flow through the qualified intermediary. The bridge loan is paid off and the remaining proceeds are handled according to the exchange structure.
Important: Because Reverse 1031 Exchanges have specific timing and structural requirements, investors should engage qualified tax, legal, and exchange professionals early in the process.
PROGRAM HIGHLIGHTS
Reverse 1031 Exchange Bridge Loan Highlights
Bridge Loan
- 6-month term for investment properties
- Up to 60% LTV
- $250,000 minimum bridge loan amount
- No monthly payments
- No prepayment penalty
- Existing liens on the departing property paid off at closing
- Continue collecting rental income from the departing property during the bridge period
Replacement Property Financing
- Purchase loan amounts up to $3,000,000
- Up to 75% LTV
- $150,000 minimum purchase loan amount
- Multiple income qualification options available, including: DSCR, Bank statement, Full documentation, Asset depletion, Asset qualifier
- Financing available for 1–10 unit residential replacement properties
Have a question?
We have the answers.
What is a Reverse 1031 Exchange?
A Reverse 1031 Exchange allows a real estate investor to acquire a replacement investment property before selling the property they intend to relinquish. This reverses the typical order of a traditional 1031 Exchange, where the departing property is sold first.
What’s the difference between a traditional and Reverse 1031 Exchange?
In a traditional 1031 Exchange, the investor sells the departing property first and then purchases a replacement property. In a Reverse 1031 Exchange, the replacement property is acquired first and the departing property is sold afterward.
How can a bridge loan help with a Reverse 1031 Exchange?
Most investors have a significant portion of their available capital tied up in real estate. LendSure’s Bridge Loan can provide access to equity from the departing property before it sells, creating liquidity that can be used toward the replacement property purchase.
Do I have to sell my investment property before buying the replacement?
No. A Reverse 1031 Exchange is specifically structured so the replacement property can be acquired before the departing property is sold.
When do I need to set up the Reverse 1031 Exchange?
The executed exchange documents must be in place before the purchase, and if not, the purchase will not be a valid replacement for the following sale of the relinquished property.
How long do I have to sell my departing property?
The departing property must generally be identified within 45 days of purchasing the replacement property and sold within 180 days. Investors should work with qualified tax, legal, and exchange professionals to ensure their transaction meets applicable requirements. Rose’s revised process lays out these two deadlines separately.
Are monthly payments required on the bridge loan?
No. Interest accrues daily from funding, but there are no monthly payments required on the bridge loan. The bridge loan is paid off after the departing property is sold.
Can I continue collecting rent from my departing property?
Yes. You can continue collecting rental income from the departing investment property during the bridge period while preparing the property for sale. The wholesale program content specifically includes this as a benefit of the bridge structure.
Yes. You can continue collecting rental income from the departing investment property during the bridge period while preparing the property for sale. The wholesale program content specifically includes this as a benefit of the bridge structure.
Does the bridge loan affect qualification for my new purchase?
Existing liens on the departing property are paid off through the bridge financing, and the bridge loan does not require monthly payments. This means there is no monthly bridge payment impacting debt-to-income for the new purchase.
What types of replacement properties can LendSure finance?
LendSure offers financing for 1–10 unit residential replacement properties. The relinquished property can be another type of U.S. real estate, subject to applicable exchange requirements.
How is the replacement property financed?
LendSure can finance the replacement property alongside the bridge loan, with purchase loan amounts up to $3,000,000 and financing up to 75% LTV. Available qualification options include DSCR, bank statement, full documentation, asset depletion, and asset qualifier programs.
What happens after my departing property sells?
Once the departing property sells, the proceeds flow through the qualified intermediary and the bridge loan is paid off. After replenishing any out-of-pocket cash used for the down payment, remaining equity must be reinvested to fully defer capital gains. Reinvestment could include paying down the purchase loan or funding a new forward 1031 Exchange into another replacement property.
Investors should consult qualified tax and legal professionals regarding reinvestment requirements and the tax treatment of their specific transaction.
