No recourse Lending

I am new to the REI business and am wondering what does it take to get non-recourse lending. I am thinking of setting up an LLC or Corp as an investment vehicle and dont necesarrily want recourse against me personnaly if mortagage doesnt get paid back…Any advice or thoughts would be greatly appeciated

I’ve been in the mortgage business for 20 years, and have only done a handful of non-recourse mortgages. The highest LTV I’ve seen is 60%, so you’re either going to risk your credit or your money. Lenders don’t want non-performing loans and the best way to ensure that is to make the borrower put something on the line.

There are several options for non-recourse lending in commercial property. You can get non-recourse up to 80% LTV. This type of financing is primarily for the main income property types - multi-family, office, retail, industrial and hospitality. Financing is available as low as $250,000 with non-recourse.

Don McClain

Thanks Don
What is implication on rates? i.e., is there a premium for a non-recourse loan?

Non recourse loans depend on the quality of the property if you have income in place that will cover the mortgage then you should be able to get a non recorse loan up to 80% of purchase

Ephraim Chambre

Can someone elaborate on what no recourse lending is. Is this a loan without a personal gurantee, lender has no right to go after a summary judgement?

That is correct. Except for standard “Bad Boy Clauses” (fraud, misrepresentation, bankruptcy, deception) in the event of a default, the only recourse the lender has is the property itself, and perhaps the entity that owned it. No personal liability.