Non-recourse Loan Refinance out of my name?

Question

Is it possible to refinance a property with a strong income history out of my name and into an LLC with a non-recourse commercial loan?

Has anyone else done this?

Is it possible to do it with multiple properties that are all under the same LLC?

James Sloan · Answer

I am thinking in terms of the future.

I have adjoining properties which will eventually have 3-4 separate listings with a valuation over 2 M.

I would only consider this after they developed a strong income history, making my PG irrelevant.

Jonathan Taylor · Answer

@James Sloan can you provide more details please? Full doc agency debt can be non recourse with bad boy cutouts but these are usually for higher balance loan amounts (roughly 2m +)  on large assets (MF 50+, industrial, strip malls, type 2 commercial basically) For 1-4s or 5+ MF loans I have done, have all been full recourse.

Please explain your property and deal so we can better guide you on options.

Matthew Crivelli · Answer

@James Sloan

Why can't you give a personal guarantee. Typically the only time you will see a commercial lender willing to skip the PG is when you are using an SDIRA or similar investment vehicle  to purchase or refi. The investor takes a large haircut on leverage for this. You would be better off finding a partner who can sign for you.

Erik Estrada · Answer

Hey James,

Which bank is offering non recourse commercial loans?

Greg Kasmer · Answer

James - All the banks/credit unions I've delt with that loan to an LLC ultimately want a personal gaurantee on the loan. The good news is that once the loan is to the LLC the loan doesn't show up on my personal credit history. Now, that's not to say that a bank/credit union won't offer a non-recourse loan, but I think it's going to be an exception rather than the rule from my experience. Good Luck!

Nathan Grabau · Answer

This is possible, but it is going to be lender specific. For a lender, a non recourse loan could have appeal if there is a large equity position, because it makes repo'ing it easier. That being said, if you start walking into banks looking for non recourse loans, you are going to be asked for a why, and you will need a better answer than "I do not want to be personally responsible for the money you are lending me."