Case Study

Reverse 1031 Exchange Apartment Building Private Money Loan

Loan Details

Loan Amount:  $8,200,000

Loan-To-Value:  75% LTV

Term:  12-Month

Situation & Challenge

Our client, who was selling a smaller apartment building for $3.5 million through a 1031 Exchange to acquire this property for $11 million, ran into a problem when the buyer’s financing on the $3.5 million property fell through. In order to close on the $11 million property, the investor needed to switch from a 1031 Exchange to a Reverse 1031 Exchange. (In very simple terms, a Reverse 1031, the exchanger acquires a new property and has 180 days to sell the previous property).

Solution & Result

First Capital Trust Deeds worked with a private money fund to pull $2,000,000 out of the vacating $3.5 million property for the down payment. Then, we used an $8,200,000 private money bridge loan to complete the $11 million apartment acquisition through a Reverse 1031 Exchange.

Within three months of closing, the Reverse 1031 Exchange was completed as a new buyer performed on the $3.5 million sale, closing out the 1031 Exchange.

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