Minnesota’s Non-QM
Wholesale Lending Partner

BFF holds Minnesota Residential Mortgage Originator License #MN-MO-243082, issued by the Minnesota Department of Commerce under Minn. Stat. Chapter 58. Minnesota’s licensing structure is uniquely simple: No Qualifying Individual required (contrast with Maryland, Arkansas, Tennessee, and most series states that all require QI designation); No minimum net worth ($0, vs. $25K for most states); No in-state physical office required. Key requirements that are distinctive: (1) Volume-tiered surety bond starting at $100K (≤$5M MN volume), scaling through $125K ($5M–$10M), $150K ($10M–$25M), $200K ($25M–$50M), $250K ($50M–$100M), and $300K (>$100M); (2) Workers’ compensation insurance required — one of very few states in the series requiring workers’ comp as a licensing prerequisite; (3) Separate Trade Name License (OTN) for each DBA — BFF’s “Brokers First Funding” trade name requires an OTN in addition to the company license; (4) Branch license only if the branch is physically located in MN; (5) MLO CE includes 1-hour Minnesota-specific instruction annually. Renewal December 31. MN is business purpose-allowed. Verify at mn.gov/commerce.

Minnesota’s Fortune 500 executive bank statement borrowers have one significant structural difference from Michigan’s automotive executives: RSU (Restricted Stock Unit) vesting events are more prominent in Minnesota because of the technology and health insurance company concentration. UnitedHealth Group and Medtronic are both publicly traded; senior executives receive RSU grants that vest on 3- or 4-year schedules, creating large one-time deposit events ($50K–$500K+) that are not recurring income. Best practice: always clarify whether a large deposit is a recurring bonus or a non-recurring RSU vesting event. If recurring: include in 12 or 24-month average. If non-recurring RSU vest: discuss with BFF underwriting on whether it can be treated as one-time supplemental asset rather than recurring income. Cargill is the largest private company in the US — its executives do not have publicly traded equity but receive complex P&L-linked bonuses, commodity trading performance awards, and profit-sharing distributions tied to Cargill’s global commodity operations. Cargill bonus amounts can vary dramatically year-to-year with commodity prices — 24 months is strongly preferred for any Cargill employee to average across a full commodity cycle. Request the borrower’s Cargill compensation statement to document the fixed vs. variable income split before using a 12-month single-year average.

Brainerd Lakes has the lowest saturation (44 active listings) and highest median annual STR revenue ($62K) among Minnesota’s top Airbnb markets. Demand is genuinely four-season in a way that differs from any other state in the series: Summer (June–August): lake boating, fishing, and resort season (peak; 50–60% of annual revenue); Fall (September–October): duck and deer hunting, fall foliage, shoulder season still strong; Winter (November–March): Minnesota has the world’s most developed snowmobile trail system, with 22,000+ miles of trails including the Paul Bunyan trail network near Brainerd; ice fishing for walleye and northern pike on Gull Lake and the Whitefish Chain; Spring (May): Minnesota Walleye Fishing Opener — the Saturday closest to May 15 each year is Minnesota’s most culturally significant outdoor event, drawing hundreds of thousands of anglers statewide. Properties near walleye lakes (Mille Lacs, Leech Lake, Gull Lake) earn peak spring rates on opener weekend. AirDNA annual projections for Brainerd Lakes should reflect all four seasons. Never use summer peak ADR extrapolated to 52 weeks — the Brainerd Lakes market is deep, not shallow, because of its four-season revenue diversification.

Duluth’s 68% occupancy rate is the most compelling pure-occupancy metric of any Minnesota STR market and ranks among the highest of any STR market in the entire BFF series. The structural reason: Duluth and the North Shore are geographically supply-constrained by Lake Superior to the north and the dramatic ridgeline of the Sawtooth Mountains to the south — there is limited developable land adjacent to the most desirable STR locations. New North Shore cabin inventory requires expensive engineering for steep terrain and often faces shoreline setback requirements under Minnesota’s Shoreland Protection rules. The result is a persistent supply-demand imbalance that supports 68% occupancy and pricing power. For BFF DSCR submissions in Duluth and North Shore: always confirm current compliance with Minnesota’s Shoreland Protection regulations (Minn. Stat. § 103F.201 et seq.) for any lakefront or near-shore property — Shoreland rules set minimum setbacks and lot size requirements that can affect property use and value. Properties within 1,000 feet of a lake or river classified as “General Development” lakes have specific setback and impervious surface requirements. The Boundary Waters BWCA investment argument: federal wilderness designation permanently prohibits new motorized commercial lodging within the wilderness boundary — existing non-motorized cabin lodges (for canoe-in, portage-in access) are grandfathered but cannot expand. This creates genuine long-run scarcity for STR properties near BWCA entry points in Ely, Fall Lake, and Moose Lake.

Rochester’s Mayo Clinic DSCR market has a distinctive feature not present in any other healthcare city in the series: visiting fellows, international patients, and medical tourism create temporary housing demand on top of the stable permanent employment demand. Mayo Clinic treats patients from all 50 states and 140+ countries annually; families accompanying patients for extended treatment episodes (often 2–8 weeks) create short-term furnished rental demand at rates between a hotel and a monthly apartment. For DSCR investors in Rochester, this “medical tourism STR” niche produces occupancy and ADR levels between traditional LTR and standard tourist STR. The Destination Medical Center (DMC) initiative — a 20-year, $5.6 billion public-private investment program with state and city partnerships — is actively adding 30,000+ new residents, $6 billion in private investment, and transforming Rochester’s downtown into a global medical innovation district. DSCR investors who acquire in Rochester’s DMC-adjacent districts (Heart of the City zone, Discovery Square, Upper North Broadway) are positioned in the primary development corridor. Always model Rochester DSCR LTR using conservative market rents verified against Zillow or Rentometer for the specific neighborhood, not the DMC marketing projections for proposed future development. The DMC is real and transformative, but conservative rent estimates should be based on today’s proven comparables.

Minnesota does not have a statewide STR law; municipalities and counties set their own requirements. There is a wide regulatory spectrum across the state. Minneapolis: STRs require a Minneapolis STR license; operators must be the primary resident (owner-occupant rule for non-hotel STR in most residential zones) — this is the most significant STR restriction in the state, effectively limiting non-owner-occupied STR in most Minneapolis residential zones. Always verify current Minneapolis STR ordinance before submitting Minneapolis residential purchase DSCR STR files. St. Paul: similar STR registration program, less restrictive than Minneapolis in some zones. Duluth: STR registration required; Canal Park commercial corridor has more permissive STR zoning than residential neighborhoods. Brainerd Lakes (Crow Wing County unincorporated areas): minimal STR regulation in most unincorporated township areas — among the most permissive environments in the series. Ely (St. Louis County unincorporated): minimal STR regulation for non-motorized cabin properties near BWCA. Key distinction: the Minneapolis owner-occupant requirement makes Minneapolis the most restrictive STR jurisdiction in Minnesota for non-owner-occupied DSCR STR. Virtually all other Minnesota STR markets (Brainerd, Duluth, Ely, Walker, Detroit Lakes) operate with far less restriction. For any Minneapolis STR DSCR submission, confirm owner-occupancy status with the broker before submitting.