I am gearing up to start investing in some rental properties (probably at least 10 single family homes). I prefer to buy locally here in South Florida.
I want to use leverage to get higher returns, and also, just as importantly, get the tax write off so I won't pay any taxes (as they will be deferred) on that higher return.
I want to protect my assets that are not in real-estate in the event a worst-case-scenario plays out and the houses get foreclosed upon. I know some states always are non-recourse, and I've seen conflicting information about Florida in that regard.
In Florida, do I need to get a non-recourse loan in order to protect my other assets?
If I do need to get a non-recourse loan to protect my other assets, can I get a 30 year loan with a fixed rate? If so, what are the terms?
I called two major non-recourse lenders and they both told me the longest term I can get is 10 years, amortized to 30 years, with a balloon payment due after 10 years. I don't want to take the risk that goes along with a balloon payment, so I am hoping that I can get a 30 year fixed loan. This will not be done in an IRA, by the way.
Doubtful, I haven't seen any. There's no "non recourse" statute in FL. Terms would be shorter, rates likely higher for the additional risk.
We work with several lenders offering non-recourse financing and if I remember correctly at least one of them offers 30-yr loan. Send me a PM and I'll get you the list of those lenders.
The benefits of non-recourse loans are fairly self evident. Leveraging your IRA funds allows you to purchase more property than you otherwise could have. Assuming you are a smart investor, and are purchasing quality investments, the ability to leverage your funds means a dramatic increase in the potential rate of return you can earn inside your retirement account.