Recourse loan ever good?

[Charlotte Dunford]

I understand that non-recourse loans are usually better. However, my underwriting results usually suggest that I negotiate the price down, almost always loan amount would drop to under $1 million which leads to a recourse loan. But that's the only price the deal would work for my expected return. Any thoughts? I definitely don't want to overpay just to get the loan over 1 Million. Are recourse loans always a no no? What should I do in this situation

[Rivers Plowden]

Who are are getting financing through? If it's a local/regional bank, it will most likely be recourse. Not something I would stress over if this is your first deal. I think you can get into a Freddie Mac loan without the experience requirement, but I can't tell you the loan amount limits off the top of my head. For Fannie Mae, you would have to meet the experience requirements. Otherwise, I think it's pretty difficult to get a non-recourse from a local lender. Others will know more about the agency loans than myself.

If it's a value add opportunity, you can always try to finance through a local bank with a recourse and then after you have repositioned the property, refinance to an agency non-recourse loan.

Regardless, I don't think the recourse part should turn you away, unless of course you have malicious intentions.