Intro: new commercial investor

Member since 2026 · 16 posts · 4 votes

Hello,
I have some questions about commerical real estate and financing.
What is really the danger in buying property if really the credit is business credit? If a property goes under or has a major financial emergency then the risk is really the business not the personal credit. Ideally we don’t want either but doesn’t this make it possible for anyone to start a business and take out a business loan to buy a business? I’m really interested in hotels and multifamily real estate like apartment complexes.
How can I on here find partners or create a GP team? Are there bigger pocket forums to find partners?

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Vaibhav PuranikPro Member

Member since 2025 · 78 posts · 42 votes

Financial liability doesn't work the same way as other kinds of liability. The LLC may protect you if someone falls on your property. But banks secure their money by having multiple layers of security. It's a common practice. Unless you are seasoned and experience, they will not give you a non-recourse loan. The most common practice is to raise money from investors. So you get money from other people and you put your efforts in the deal. If the deal is good, numbers make sense, investors will invest and that will be your downpayment. That's how people do it. And it's not easy.

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Vaibhav PuranikPro Member
Member since 2025 · 78 posts · 42 votes
6d
@John Adair , business credit does't work quite that way. There is a concept of Recourse loans and Non Recourse loans. If you are just starting out, you are unlikely to get a non recourse loans. In Recourse loans, even if the loan is given to the business, you become the guarantor. You need to have enough assets to cover the potential shortfall. That means if the business goes under, you are liable! Otherwise, the bank won't lend to you (no matter how good the asset is). When you do a lot of deals and the loan amount goes higher than $2M, non recourse options open up. I think in order to get Multifamily (or Hotels) experience, you need to find out people who are in the field and offer to invest money with them in exchange of them teaching you the mechanics of it. Or else, join some syndicator's communities (Michael Blank has a community where you pay $300 per month just be member of it) and make some friends there.
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- John Adair
  OP
  Member since 2026 · 16 posts · 4 votes
  6d
  What's the point of an LLC if you're just personally liable? If the business goes under and then they just take the house you're living in to cover what's the point of an LLC. It's like the business doesn't even exist and it's just you covering it
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- Vaibhav PuranikPro Member
  Member since 2025 · 78 posts · 42 votes
  6d
  Financial liability doesn't work the same way as other kinds of liability. The LLC may protect you if someone falls on your property. But banks secure their money by having multiple layers of security. It's a common practice. Unless you are seasoned and experience, they will not give you a non-recourse loan. The most common practice is to raise money from investors. So you get money from other people and you put your efforts in the deal. If the deal is good, numbers make sense, investors will invest and that will be your downpayment. That's how people do it. And it's not easy.
  [email protected]
  1 Reply
- John Adair
  OP
  Member since 2026 · 16 posts · 4 votes
  6d
  @Vaibhav Puranik so that’s how someone buys a 50-100 apartment complex is getting investors for the down payment. But what do you mean then by nonrecourse loan then, you mean that’s separate than the mortgage. The mortgage is built off the property credit not my personal credit like how much rents it pulls in? Is that what you’re in? Have you don’t any deals like this? I’m super curious how these people did these life changing deals. I’ve read about investor clubs that you can pitch and they offer lots of investment? Do you have any suggestions for me to read or someone to talk to or how to get into this properly?
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- Vaibhav PuranikPro Member
  Member since 2025 · 78 posts · 42 votes
  6d
  Whether a loan is recourse or non-recourse has nothing to do with how the lender underwrites the property. The lender gives a loan to the LLC based on the rents and expenses. They maintain a 20% to 25% buffer called DSCR. That means if the annual mortgage payment is $100K, they want your Net Operating Income (rents minus expenses) to be $120K.
  But even with that buffer, if you are not seasoned and experienced, you will be required to be a guarantor for the loan. In bigger deals, there is generally more than one person on the managing side (or GP), and the bank checks all of their finances as an additional backup. So even though the loan is based on the property's finances, the decision-makers are liable in recourse loans.
  The bank also sets net worth requirements for these GPs. For example, the combined net worth of all the GPs signing as guarantors may need to exceed a certain amount—or even the loan amount. GPs sometimes bring in a rich person to help satisfy the bank's requirements. In return for serving as an additional guarantor, that person receives a cut of their GP earnings.
  As far as reading is concerned, I think there are two books you should read. One is mine—I'll shamelessly mention it here—Own Real Estate. Not the Headaches by Vaibhav Puranik (available in physical, digital, and Audible formats). The section on syndication explains how all of these things work.
  The second book is What Every Real Estate Investor Needs to Know About Cash Flow... And 36 Other Key Financial Measures by Frank Gallinelli. This book will familiarize you with the numbers.
  If you just want to talk to someone, I'm willing to talk to you. Just email me. My email is in the signature.
  [email protected]
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Ronald RohdePro Member
Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
6d
Businesses file bankruptcy all the time. If you're buying national credit tenants, then yes, its largely underwritten like a bond, but yield spreads are thin. Starbucks and Walgreens can close locations too.
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- John Adair
  OP
  Member since 2026 · 16 posts · 4 votes
  6d
  I’m just super interested in how I buy 50-100 doors in one deal. I hear a lot of people have done that and I don’t understand how they did that with no money of their own. That’s a life changing amount of money. Also they didn’t have landlord experience.
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Denise SuppleeBusiness Member
Realtor · Willow Grove, PA · Member since 2017 · 991 posts · 646 votes
6d
Business credit can give you some separation, but don't assume it means you're completely protected personally. A lot of real estate lenders will still require a personal guarantee, especially when you're starting out. And if the property doesn't produce enough to cover the debt, the problem is still there whether the loan is in your name or the business's name.
For partners, I'd spend some time in the BiggerPockets forums and local investor groups. Before looking for a GP, though, figure out what you bring to the table. Maybe it's finding deals, managing properties, raising capital, or something else. A good partnership usually starts with each person bringing something the other person needs.
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- John Adair
  OP
  Member since 2026 · 16 posts · 4 votes
  5d
  Well I join ADPI with a large investment and they’re supposed to teach me and put me into a group that is a GP group. I haven’t got word back if they provide the principal. I don’t know how this will work without finding a Key principal. How do I find one on here? Do you just send deals at people until someone bites? That seems like that’s not a good strategy
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