How to use TIC to accept 1031 money on a deal

[John Bennett]

I have a portfolio deal we are raising funds for. We had initially decided to create a holding LLC with two drop down single member LLC's. We have received a lot of interest, but have a few potentially large investors wanting to use 1031 exchange funds. I understand the only way to do this by placing them in as a TIC. Can anyone explain how then to structure and pay equity splits, prefs, and manage?

Thank you for any insight on this.

[John Bennett]

@Dave Foster Having been a banker in a previous life I understand the need to secure the collateral. If the 1031 TIC Investors assign there interest to the no-recourse loan then all should be in good order. One borrowing entity like normal, with 100% of the property pledged under the non-recourse loan. The assignment of ownership interest is a contingency of investing in the deal. We are also requiring a proof of available funds should their 1031 not close on time. Of course, I have also suggested they could do a reverse exchange that would also work and solve the timing problem I think.