Non-Recourse Loan Products for a Three-Family Under $1MM

Member since 2021 · 174 posts · 56 votes

Is anyone familiar with any non-recourse loan products for a three-family being purchased through an LLC for under $1MM?

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Jared RineBusiness Member

Lender · Sacramento, CA · Member since 2009 · 1k+ posts · 277 votes

@Jon Fletcher..why do you need non-recourse? Is there a reason that you can't personally guaranty even if the loan is to an LLC? Where is the property?

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Jared RineBusiness Member
Lender · Sacramento, CA · Member since 2009 · 1k+ posts · 277 votes
4y
@Jon Fletcher..why do you need non-recourse? Is there a reason that you can't personally guaranty even if the loan is to an LLC? Where is the property?
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Jon Fletcher
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Member since 2021 · 174 posts · 56 votes
4y
That's a great question @Jared Rine. The reason I'm looking for non-recourse is because I'm the GP and contributing only 20% of the cash. My LP is contributing 80% of the cash. However, my LP is a silent partner so does not want to guarantee the loan or be involved in anyway besides writing a check. Every lender I've spoken to requires anyone with more than 20-50% ownership to be a guarantor. My thought is that the only way around this is to go the non-recourse route.
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Steven Goldman
Lender · PA · Member since 2019 · 533 posts · 461 votes
4y
The more complicated you structure the deal the harder it is going to be to get financing. The guarantor will need to be a 20 percent owner of the LLC. That does not mean he has to contribute 20 percent of the down payment. It just means in the Operating agreement you have to own 20 percent of the LLC. You can be making a management contribution. Make sense?
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Jon Fletcher
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Member since 2021 · 174 posts · 56 votes
4y
That's great insight - I guess the LP can technically be a lower % owner despite contributing a higher % of the equity. But if they're contributing 80% of the equity, it may be a hurdle for me to convince them that they are only a 19% owner on paper. (Assuming 20% is the Lender's threshold for being a guarantor, which seems to be the case for every Lender I've spoken to.)
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Simmy AhluwaliaPro Member
Lender · Atlanta, GA · Member since 2015 · 1k+ posts · 200 votes
4y
Quote from @Jon Fletcher:

Is anyone familiar with any non-recourse loan products for a three-family being purchased through an LLC for under $1MM?

Jon, where are your properties located for the NR loan request?
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