i want to buy a commercial duplex and put down 20%, do i have to put up my personal house as collateral or as a personal guarantee to get the mortgage?
Technically you will be putting personal guarantee for duplex purchase. I have never seen bank go after someone personal house as well. They would just take the investment most likely and stop at that. You always just need to read the fine print and ask your lender professional.
many years ago i bought a bar restaurant, and i had to sign a personal guarantee. I assumed they would go after my personal home if i could not make the payments. The business failed and I somehow at the last moment was able to find a buyer, however i was terrified about ever getting back into the real estate market again as a result. Now years later, i want to buy a duplex (or two) and never want to risk losing my home (completely paid off). I have money to put down on a commercial loan but was not sure how this works, and did not want to ask the lender...rather be informed before speaking with the lender as how i can best protect my personal assets.
Only larger over million dollars can find lenders that will not make you do personal guarantee. It’s part of risk if you do the homework right it shouldn’t be an issue.
so despite putting down 20% they can just liquidate my HOUSE?? what if i sign the lending docs under the LLC (so only the LLC is making the personal guarantee)? Can i transfer my personal home to a Trust or a separate LLC? I never want to wager my house again. Don't care about the money, just need a place to live if everything goes to hell, life is too unpredictable...
i was reading about that. My novice understanding is that that NR loan is an extremely rare option and unfamiliar to most conventional commercial lenders. Hope I am wrong, and will ask. Happier with a higher rate to limit that risk. I would also be more aggressive in acquisitions knowing that if everything somehow unravels (no one can predict the future) I would still have a place to live (that took me a lifetime to acquire and payoff).
A NR loan is not that rare. If you are investing with your Self Directed IRA/ROTH and are borrowing funds, you have to use a NR loan. There are several hard money lenders that will do NR loans.
i was reading about that. My novice understanding is that that NR loan is an extremely rare option and unfamiliar to most conventional commercial lenders.
Not at all - What they are is a higher interest rate and they're going to look at you a lot harder.
Basically (in a lien-theory state), they're limited to what the house is worth if they have a trust deed and since you signed, may have a deficiency claim, but ask a KNOWLEDGEABLE commercial mort broker.