Usually a traditional 1031 exchange is executed in which the original property is sold and the funds of that sale go directly to the payment or down payment of the replacement property. With the  Reverse 1031 Exchange , the replacement property is bought first with out a down payment from the company. Reverse 1031 exchange processes are normally much more complicated than the traditional 1031 exchange.  This is because the replacement property is purchased before the initial property is relinquished. Though this method is rarely used, it is has the same tax benefits as the traditional 1031 exchange.  Like all 1031 exchanges, the reverse exchange cannot show a profit and must be executed with like kind properties.