PRIVATE LENDER NEEDED FOR NON-RECOURSE LOAN

I am buying condos for ~35k with $6000 down and need a first position loan for the remaining ~29K

The two problems that I’m having are:

  1. The funds need to be true non-recourse as this is a SDIRA retirement account, completely property based. No personal credit info or guaranties can be given (per IRS guidelines), and

  2. The few SDIRA commercial lenders that I can find require a minimum $50K loan.

Properties are ‘Class A’ type properties with the usual amenities, such as weight rooms, hot tubs and swimming pools, minimum two bedrooms. Management will be provided by a professional management company

Term and interest rate open to negotiation- but I’m not looking for a Hard Money loan.

So, I’m reaching out for ideas and possible contacts, does anybody have any experience that might help?

So you want someone to loan you money at greater than 80% LTV with no personal recourse or guarantee on what amounts to basically a no doc loan??

It will be very difficult if not impossible to find financing like this. Way to much risk for a smart investor.

Beep…Fantasy Island next stop !!! :banghead

Can you eat the penalty for a prohibited transaction?

Christopher- I can go higher on the LTV, what do you think would make this more palatable?

Rookie- I don’t know the lay of the land until I ask…

BLL- What makes this prohibited?

enarius,
I do apologize,its just we get many newbie investors looking to do little or no money down deals and its near impossible to get done in todays financial climate…And yes more down on your part will make the deal more desireable to a lender,private or another…skin in the game equals safety net for the lender…

IRA owner cannot personally guarantee a loan for IRA assets. IRA would be deemed distributed as of Jan 1 of the year the guarantee was made and IRA owner is subject to a 10% penalty on top of the income taxes. With such low amounts, there may still be a deal even with these costs.

Rookie- I definitely understand the ‘skin-in-the-game’ concept, especially with this type of deal -with no personal credit or guarantees. The lender has to be completely comfortable with the property and the LTV.
Do you know of any lenders or others in the industry that have experience with this?

BLL- My understanding is that as long as I (or my immediate family or businesses) don’t enter into the deal personally, in any way shape or form, by providing money or credit, it doesn’t break the line.
The money I’m using comes from an established SDIRA through Entrust.
Is this your understanding also? Or do I need to go back and research it some more?

enarius,
No…I dont know any investors pvt or not that would be interested in this loan…If you want to attract a serious lender I suggest you dramtically up your cash end in this deal and consider a hard money lender even if its for a short term loan then you go conventional to refinance…No one despite what others post are very interested in low % real estate mortgages that arent really highly collateralized…I personally wouldnt even take the loan if you had %50 down because you will argue the rate and there are tons of experienced real estate investors with alot of capital to lend to that will gladly accept HM rates and refi later…We are in unprecedented times to invest in Real Estate yet we also have a serious issue with financing due the strict nature of the banks lending…Thats what makes HM so widely used currently…I suggest you speak with Christopher W and ask him his opinion on how you can attract a lender…He knows the banking/lending guidelines far better than me…All I do is lend hard money at hard money rates…On highly collateralized deals…

That’s why I asked if you could eat the penalty. A personal guarentee would break the line as you put it, but it may allow you to get the deal done. Unfortunately, you would lose the tax treatment of the IRA in the process. If this is a Roth, I recommend you do nothing to jeopardize the status of the IRA.

As to a lender, I can make no suggestions other than to listen to Rookie and Christopher W.