Reverse 1031 Exchange Loans in California: How Private Bridge Lending Unlocks More Deals
Introduction – What Is a Reverse 1031 Exchange?
In a traditional 1031 exchange, investors sell an existing property before purchasing the replacement. But what happens when the ideal replacement property comes along before the current property is listed or sold?
That’s where Reverse 1031 Exchange Loans in California come in.
A reverse exchange allows investors to buy first, then sell—offering more control and better investment opportunities. However, most banks won’t finance these transactions due to title complications and compliance restrictions. That’s why many investors and brokers turn to private bridge lenders like Pacific Private Money.
Learn more about our Reverse 1031 Exchange Loan Program.
Why Use a Reverse 1031 Exchange Loan?
Reverse 1031 loans offer unique advantages, especially in California’s fast-paced real estate market:
- Speed: Close in as little as 5–10 days
- Flexibility: Financing available even when the property is held by an Exchange Accommodator (EAT)
- Leverage: Use equity from existing properties through cross-collateralization or cash-out strategies
- Tax Compliance: Stay within IRS timelines and defer capital gains
Private lenders fill the funding gap left by conventional institutions, especially for borrowers facing timing or liquidity challenges during exchanges.
How Reverse 1031 Exchange Loans Work
At Pacific Private Money, we structure our Reverse 1031 Exchange Loans to be flexible and efficient:
- Loan Term: 12–18 months
- Max CLTV: Up to 70% (higher on exception)
- Use of Funds: Purchase of replacement property
- Repayment: Typically repaid after sale of relinquished property
- Exit Strategy: Sale or refinance
These loans are ideal for real estate investors who need to act fast without liquidating assets or compromising the exchange process.
Case Study: Reverse 1031 Exchange – Oakland, CA
Situation: A real estate investor identified a promising replacement property before listing their existing investment for sale. Conventional lenders refused to fund the transaction because the property was held by an Exchange Accommodator (EAT), and the investor lacked the liquid capital to purchase outright.
Solution: Pacific Private Money structured a $1.4 million bridge loan by cross-collateralizing the borrower’s existing property with the new one. The entire transaction was completed with a single loan.
Outcome: The borrower successfully closed on the replacement property, remained compliant with IRS timelines, and repaid the loan upon the sale of the original property—completing a fully compliant reverse exchange.
Who Should Consider Reverse 1031 Loans?
These loans are designed for:
- Real estate investors pursuing tax-deferred exchanges
- Borrowers who want to buy before they sell
- Clients who own equity-rich property but lack liquidity
- Loan officers and brokers seeking creative solutions for their investor clients
Watch the Full Webinar
Want to see how reverse exchange loans work in real-world scenarios? Our team recently hosted a webinar that breaks down the Oakland case study in detail and explores common lending strategies.
Why Choose Pacific Private Money?
Since 2008, Pacific Private Money has funded over $2 billion in real estate loans. We specialize in complex and time-sensitive transactions—especially when banks say no.
- Experienced in 1031 and Reverse 1031 scenarios
- Fast funding and flexible structures
- California-based expertise and service
- Equity-based lending with consistent results
Have questions about structuring your next exchange deal? Contact us today to speak with a lending expert.