Small *Nonrecourse* Loans

[Cliff Earle]

I've run across non-recourse lenders. I've run across small loan lenders. In fact, there are multiple good threads for both topics on this very site. But I've yet to run across someone who will do small non-recourse loans. Any thoughts, other than private money?

Thank you!

[Account Closed]

@Russelin Kisiel

Well its a self directed IRA held at Vantage IRAs. Bascically, I had enough cash and bought a home for cash, then I leveraged that home with EFirstBank.

In 2012 EFirstBank loaned 65% of the value of the home. Home was worth about $140k and I got a loan for about $85k. This was all inside of my IRA -> LLC.

Now that mortgage is almost paid off. Next year I am hoping to pay it off. Then I will start the leverage process again but now I have two homes paid off.

Not sure about solo 401k for real estate. You have to have a Custodian (mine is Vantage IRAs) that can manage real estate inside the retirement vehicle. I would contact Vantage. They can help you find a mortgage lender well.

Cheers

[Dmitriy Fomichenko]

Originally posted by @Russelin Kisiel:
@Seth Shapiro Is your loan from them under $50,000? I'm asking because I'm considering a solo 401k and taking into consideration how I would purchase rental properties within the 401k. I'm under the impression you can only borrow up to 50% of the 401k value or 50,000 (which ever is less). This means I'm looking at properties between $50-65,000 and yes, I want to leverage to maximize my ROI. I've read here and there that I would need a none-recourse loan but am hearing they are difficult to come by. I need to figure out if this is truly an option for me or pie in the sky because the beginning value of my solo 401k will be too low to fine none-recourse loans. Thanks

Russelin, we work with several non-recourse lenders and some offer loans with 30% down. The process of getting non-recourse loan is no more difficult than getting conventional loan. I personally got a loan last year from North American Savings Bank, I put 40% down and received 5/1 ARM loan at the rate of 4.875%. We have those lenders listed on our website but if you'd like to PM me - I will send you the link.

You are confusing non-recourse loan with participant loan. Just like @Walt Payne mentioned the 50% rule applies to participant loan and has nothing to do with non-recourse loan.

[Dmitriy Fomichenko]

Originally posted by @Account Closed:
@Russelin Kisiel

You have to have a Custodian (mine is Vantage IRAs) that can manage real estate inside the retirement vehicle. I would contact Vantage. They can help you find a mortgage lender well.

With Solo 401k there is no need for a custodian, you can be trustee of your own retirement plan and manage the investment without third party custodian.

[Account Closed]

I am looking for a non recourse loan only because my credit is not great. I can leverage or use as collateral an investment home I have that was APPRAISED for 700k. I want to borrow like 300k. I am not sure why a lender wouldn't want to do such a deal. If you are a lender and are interested please PM me

[Jay Hinrichs]

Do you live in the home.. rules have changed for owner occ. deals.. could be your issue

[Jeremy Everett]

I'm in Michigan and have a 4-plex property looking to refinance a $190K rehab loan and most lenders won't consider it because it was built in 1890. It has been remodeled (rewired, plumbed, new HVAC, roof, basement waterproofing, siding, windows, flooring, etc) with $32K gross rent per year. The only lender (NASB) that looked at it sent out a low balling appraisal that used a city from 20 miles away as his comparison and discounted my cash flows by half for the value even though the rental history is excellent for over two years since it was rehabbed. No quads sold in my area within the last 6 months and they wouldn't use values between 6 mo and 12 mo that were higher than those 20 miles away in Methville, MI.

Anyone looking to make non-recourse loans on this old of a home, let me know.

[Pamela Johnson]

@Ann Bellamy

You hit the nail on the head. I’m looking for a lender who offers non-recourse loans for my SDRA. Any suggestions?