The borrower was acquiring a ten-property single-family rental portfolio in Castle Rock, CO, but the transaction was tied to a seller executing a 1031 exchange with a hard deadline.
At the same time:
- The borrowing entity was a large LLC with 16 distinct members.
- Equity was sourced from multiple investors, lacking traditional seasoning.
- The seller's 1031 exchange required closing in exactly 30 days.
Most lenders declined immediately. Either due to ownership limits or seasoning requirements that would have pushed the closing past the exchange deadline.
With 16 members, the equity ownership was heavily diluted. No single individual owned more than 10% of the LLC. Traditional banks demanded a Personal Guarantee (PG) from any member owning >20%, effectively freezing the deal.
Standard bank assumption:
- One or two key principals with 20%+ ownership
- Full personal recourse from qualifying guarantors
- Individual liquidity sufficient to support the loan
- 16-member LLC with highly diluted ownership
- Largest member owned 9.5%
- No individual could satisfy recourse or liquidity requirements
We utilized a specialized DSCR program that allows unlimited entity members without seasoning requirements. By underwriting the asset's cash flow rather than the individuals, we bypassed the need for entity restructuring.
Complex Entity Approval
Cleared 15+ members without seasoning or restructuring.
Parallel Processing
Coordinated title/insurance for 10 properties simultaneously.
1031 Deadline Met
Funded in 30 days.
Ten newly renovated single-family homes in Castle Rock, CO. All units were processed simultaneously to ensure the entire portfolio closed as one transaction.
Loan Type
DSCR Portfolio Purchase
Authorization
Interest Only
Prepayment
None - 0 Months
Equity Ownership
15+ Individuals
Meet the loan officer
"There wasn't any room for trial-and-error. We had to land on the right structure immediately to beat the 1031 clock."
Jack Bergen
VP, Originations
