6-Unit Cash-Out Refi – Non-Recourse Options?

Question

Hey everyone,

Looking for help for a client.

The deal itself is solid on paper but the borrower is in need of a non recourse option because he invested using his self directed IRA.

Property is owned by an LLC by two members - one member invested through a self directed IRA, other member is an individual.

Anyone able to help out or point us in the right direction?

Property is in Houston TX.

Ashish Acharya · Answer

@Michael Wyatt,

This is really a structure issue not a lender creativity issue. Because IRA funds were used, any debt must be non recourse or it becomes a prohibited transaction for the IRA owner. That alone eliminates agency and most conventional banks especially with a mixed ownership LLC. You are realistically limited to specialty non recourse DSCR lenders, local banks or private credit that already lends to IRA-owned entities. Expect 50–70 % LTV, higher rates, and reserve requirements which Brett also mentioned.

From a tax standpoint, any cash out attributable to the IRA member must flow back into the IRA and the IRA share of income will be subject to UBIT due to debt financing. If long-term flexibility is the goal, restructuring ownership or buying out the IRA interest is often the only way to reopen conventional refi options. The deal can work, but it has to be underwritten as specialty debt not treated like a standard cash-out refi.

Michael Wyatt · Answer

@Brett Synicky client's LLC owns 6 unit with a partner.  Funds used were from IRA.  They are trying to refinance.

Mayo Gilfurt · Answer

This structure is tricky mainly because of the self-directed IRA ownership, not the property itself. In most cases, true non-recourse options here come down to how the LLC is structured, who’s guaranteeing (if anyone), and whether the IRA member can be isolated from recourse entirely.

I’ve seen this work in limited scenarios, but it usually requires very specific lender parameters. Happy to compare notes offline if you’re still exploring options.

Chris Seveney · Answer

I know somebody who would go to 50 to 60% loan-to-value but your interest rate is going to be in the double digits.

Mayo Gilfurt · Answer

Michael — depending on DSCR, LTV, and sponsor profile there are a few non-recourse paths for 5+ units (agency small balance, DSCR commercial, and debt funds).

I broker capital for these structures and can usually map options quickly if you’re still evaluating.

Happy to compare scenarios if you want to sanity-check before committing to a lender.

Brett Synicky · Answer

Sorry, it's unclear, which side of the transaction are your clients on and what exactly are they looking to accomplish? Is the individual mentioned a disqualified party to the IRA? Meaning, are they an immediate family member of the IRA owner?

Sandy Hu · Answer

That tends to narrow options to DSCR-style or portfolio lenders who are comfortable lending to the entity only, with no personal guarantees from the IRA participant — and often with lower LTV and seasoning constraints.

I’ve seen some groups restructure ownership or refi timing to improve flexibility, but it’s very case-specific, especially in TX.

Michael Wyatt · Answer

No current loan, I think that would have actually made it easier to refi thru original lender if there was one.

John Jacobs · Answer

I have a self-directed IRA but am no expert.  Question:  Is the loan that they currently have on the property a non-recourse loan?

6-Unit Cash-Out Refi – Non-Recourse Options?

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