Use Of Funds

The net proceeds from this offering shall be used primarily to issue loans for part of the purchase price and renovation costs for single family, multifamily, and sometimes, commercial real estate deals that meet the Company underwriting objectives, including closing costs and working capital subject to reallocation by the Manager in the best interests of the Company and its members. Inasmuch as it is impossible to predict exact costs and the expenses necessary to conduct the business of the Fund, actual expenditures could vary substantially and materially from the following estimated use of proceeds. The amounts actually expended for each purpose may vary significantly depending upon a number of factors. Yellowstone Funding LLC reserves the right to reallocate the proceeds of this Offering in response to a variety of factors and related contingencies. Nonetheless, a Summary of Underwriting Criteria is included below and additional information is available in Exhibit C:

Fund Underwriting Guidelines

Here's a framework for underwriting guidelines and a sample term sheet for your equity-based deals.

These will focus on your max loan value constraints and other criteria you mentioned.

Underwriting Guidelines

1. Loan-to-Value (LTV) Requirements:

  • Cash-Flowing Properties: Maximum LTV will be based on appraised value or purchase price, whichever is lower, on a borrower by borrower basis.

  • Non-Cash-Flowing Properties: Maximum LTV based on appraised value will be determined on borrower by borrower basis.

  • Must demonstrate potential for cash flow within a defined period (e.g., within 6 to 12 months after the deal closes).

2. Property Type and Location:

  • Focus on income-producing real estate, such as multi-family, commercial, industrial, or mixed-use properties.

  • Property must be located in a stable or growing market with strong economic indicators (population growth, job growth, etc.).

  • Environmental and legal due diligence (no significant legal issues, clean environmental history).

3. Borrower and Sponsor Requirements:

  • Borrowers must have proven experience managing similar properties or assets.

  • Sponsors much contribute minimum equity for cash-flowing properties and an amount determined by the property value for others.

4. Debt Service Coverage Ratio (DSCR):

  • Minimum DSCR will be determined on a property by property basis for cash-flowing properties to ensure sufficient cash flow to service debt.

5. Appraisal and Valuation:

  • Properties must undergo a thorough, independent appraisal.

  • Appraisals must be no more than 6 months old at the time of the deal.

  • Any significant changes in market conditions or property specifics require reappraisal.

6. Exit Strategy:

  • Clear, documented exit strategy for repayment of the equity-based loan, whether through refinancing, asset sale, or other means.

7. Risk Mitigation:

  • Properties must have insurance covering damage, loss of income, and liabilities.

  • Personal guarantees may be required for non-cash-flowing properties depending on the deal's risk profile.

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