Qualified Intermediary for Reverse 1031 exchange in Minnesota?
Hello!  Throwaway account as I am giving my location.

Anyone have experience or able to give recommendations for a qualified intermediary for reverse 1031 exchanges in Minnesota?  We are planning to divest from some single family homes and would end up with a tax bill in the $150,000-250,000 range if we can't 1031 them (depending how many we sell.)

Our selling timeline on the houses is somewhat flexible so the plan would be to find an industrial property in the $1,500,000 to $2,000,000 range, get it under contract first, and then coordinate the house sales once we know the due diligence and closing schedule for the new building.  We already own 5 smaller industrial properties so we are familiar with buying and owning them.

I haven't done any 1031s before as we have mostly been buy and holding for 20 years.  I understand that reverse 1031s are trickier but I don't see any other realistic way to make this happen.  If you do, my ears are wide open to learn!

Any references to QIs is greatly appreciated, as well as any other thoughts or advice you may have about this process.  Thanks!

On this sub I have heard of Fidelity National Financial as a 1031 intermediary but I know nothing about them.  They say they do reverse 1031s nationwide.  [https://www.ipx1031.com/our-services/reverse-improvement-exchanges/](https://www.ipx1031.com/our-services/reverse-improvement-exchanges/)
[{"id": "i2qvw8b", "text": "Not sure why you would put the replacement property under contract first.  You have 180 days to identify from when you sell your original property.  Lots can go wrong in your sale, and it can screw up the purchase of your replacement.", "replies": [{"id": "i2qwqk0", "text": "Forgive my inexperience with exchanges.  I have to identify and close on the replacement property within 180 days, correct?  My concern is if we sell the houses first, say closing all of them within a 30 day period, that only leaves potentially 150 days to find the replacement property and close.  That feels tight in the current market for industrial properties.  But please correct my understanding if I am incorrect here.  Thanks!\n\nEdit:  Some googling seems to say that upon sale of the relinquished property, I have 45 days to identify potential replacements and 180 days thereafter to acquire the new property.  In practicality that seems very tight.  In my mind it seems much easier to find the replacement first, because selling single family houses within 180 days will be no problem.", "replies": [], "depth": 2}], "depth": 1}, {"id": "i2qyfeb", "text": "You don\u2019t need your QI to be local, they can be anywhere in the country. I have used several from IPX and they all do fine.\n\nOne note: you\u2019re right to try to get the upleg under contract first but often you have to move both forward at the same time. Add some extension contingencies into your upleg offer so you can push out the closing if you need to. You can do this with your down legs too, sometimes adding 30 or 60 days to push out the close date can gap the timeline. That way, you can avoid a reverse exchange altogether, which is expensive and complicated.", "replies": [{"id": "i2r180k", "text": "Right on, thank you!  Makes sense.  Yeah if I could get due diligence period and closing date pushed out like 120-150 days from an accepted offer then I could likely get the single family houses closed first.  Really gonna depend when I can find the upleg/replacement property.  (New term for me, do I sound hip now?)\n\nThanks!", "replies": [], "depth": 2}], "depth": 1}, {"id": "i2qykpk", "text": "The problem with reverse 1031s is you need to have the money to purchase the replacement property first or find a lender that will do it non-recourse to you personally or you can screw up the eligibility.\n\nBasically you give the intermediary the funds, they purchase the property in a stand alone LLC. You sell the relinquished property and \"identify\" the property the intermediary is holding as your replacement. Intermediary then takes your 1031 money and gives you back the funds you fronted (less fees or transaction costs).\n\nNo insight on Fidelity National but for any 1031  but especially a reverse, you definitely want a reputable professional.", "replies": [{"id": "i2r1wiq", "text": "Very good point.  In this case we would not need funds from selling the properties to qualify to buy the replacement.  But I am glad you brought that up because it is an important consideration I hadn't thought about.\n\nAnd you gave a clear explanation of how the mechanics of the process would work with the intermediary.  I haven't done this before.  As an exercise, I added a pretend sale of one of these properties to my 2021 tax return to see what the tax bill would be.  It was $65,000 just for that property.  Suddenly I am extremely motivated to figure out how to get 3-4 of those properties sold and exchanged without losing all that equity to taxes.  Thanks for the comment!", "replies": [{"id": "i2s9j9v", "text": "Someone with more experience in reverse 1031s feel free to chime in... but I don't think you can \"qualify to buy\" I think you have to have the intermediary purchase without reliance on you *at all* (guarantee or cash flow outside of the subject property) for a true reverse 1031 and not just a regular one concurrent or chain exchange like someone else suggested. \n\nAgain, why you need to talk to/use a reputable professional in the space.", "replies": [{"id": "i2v5onx", "text": "I've got a call set up today to learn the details on this.  Good point tho about not being able to rely on the cashflow of the new purchase. That might limit the size of what I can buy.  If I learn any interesting nuances, I'll post back.  Thanks!", "replies": [], "depth": 4}, {"id": "i2v9ah9", "text": "Here's some relevant text about the mechanics of the cash flow etc. of the replacement property during a reverse exchange:\n\n\"Replacement Property Parked - Phase I:\n\nIn the most common type of reverse exchange, the EAT acquires and parks\r legal title to the Replacement Property. The Exchanger or a third party lender loans the funds necessary for the EAT\r to purchase and take title to the Replacement Property. The EAT leases the property to the Exchanger under a triple\r net lease. This permits the Exchanger to receive the economic benefits and burdens of the property during the time\r that it is held by the EAT.\"\n\nSo basically an entity is created to hold the replacement property and that entity would lease it back to me temporarily until completion of the exchange (and I keep it leased to whoever has been using it.)  They have some additional advice about how to make sure the lender can make this work.  It's doable but it does sound like a much bigger pain in the ass than a traditional exchange.", "replies": [{"id": "i2vepdw", "text": "It definitely is a bigger pain.  My concern is chiefly \n\n&gt;The Exchanger or a third party lender loans the funds necessary for the EAT to purchase and take title to the Replacement Property\n\nMy understanding of this, and this could very well be wrong, is since you can't acquire the property directly (hence the ETA) you either have to A) provide 100% of the funds for the purchase to the intermediary \n\nor \n\nB) find a lender that will lend non-recourse basis to the ETA without any tie to you personally or one of your other companies/properties", "replies": [{"id": "i2x2wzi", "text": "Good points.  I spoke with my lender today and it sounds like he's been through quite a few of these.  He didn't go into detail about the mechanics of it but apparently the lending side has ways of making this work.  I'll talk to him more in the coming days and find out exactly how they do it.\n\nAlso cost wise the reverse isn't terrible.  Under $10,000 all in to buy the replacement first and sell 4 properties after to complete the exchange.  Much cheaper to do traditional but in the current market I don't see how I could coordinate everything doing it the traditional way.\n\nAlso if you contact the company I linked in the op, they can send you a 45 page document that details all the ins and outs and various ways 1031s can work.  It was super informative and corrected a lot of misinformation I had heard!", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]