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Profile picture for reinvestcash

I want to buy 2/3/4 multifamily units using a non-recourse loan. Where Can i get these loans?

I want to buy 2/3/4 multifamily units using a non-recourse loan for rental purposes. Where Can i get this kind of loan? Is it different that conventional mortgage loan?

I will pay 20% down payment on the property.

I am located in Orlando FL
  • September 13 2010 - Lake Como
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Answers (7)

Profile picture for Erez Cohen
There are no non-recourse loans.  They are only available with commercial loans and even then they are only used with large corporations and large purchases.  If you are concerned about non-recourse loans do not buy property.-  Buy stock.  You placing 20% down or for that matter even 50% down will not alleviate you of your responsibilities.
  • January 04 2011
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If you are buying investment properties, you need a minimum of 25% down, usually 30% down. Why are you worried about non-recourse. If your renters move, you are still responsible for paying the mortgage. No one is going to let you take a pass especially a commercial lender.
  • December 01 2010
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reinvestcash,

If your trying to obtain a multi-unit mortgage in your name personally, I don't see you being able to obtain a true 'non-recourse' loan.  If you truly want a 'non-recourse' loan you will likely have to go the commercial lender route and expect to put down closer to 25% - 30% at closing.  If you choose to go this route, much more scruntity will be placed on your balance sheet rather than just your income statement if you were trying to get a traditional single family investment property loan in your own name.  Do remember that even with a non-recourse loan you will still be personally responsible for all the bad boy 'carve-out' guarantees (ie. fraud, theft of rents, etc.) associated with a commercial lender. 

Another way that I view 'non-recourse' lenders is that they will only lend to a borrower that has a strong balance sheet as the primary reason for issuing a loan committment and the collateral is secondary in the credit decision.

Hope this helps.

  • November 21 2010
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Profile picture for jjlen
Whether a mortgage loan is recourse or non-recourse is generally an issue of state law, and Florida is a recourse state. You can't get a "non-recourse loan" in a recourse state, generally.
  • November 06 2010
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Profile picture for mymortgagebrokerjoe
i agree with erika. florida is a recourse state, even though fannie, freddie, and fha loans are typically non recourse. but in todays market, lenders want all the help they can get when it comes to getting their money back. even if you got a commercial loan as an llc or corp, they will most likely want you to provide a personal guarantee. if they dont, there's your answer.
  • November 01 2010
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It is my understanding that Florida is "recourse" state where they can go after your deficiency default for 5 years.

Erika In Orlando
  • September 23 2010
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Hi there--
did some research ...  Non-recourse Loan definition means if you default they cannot come after any of your assets - they can only use the collateral repossessed.
Is that your thinking as well?

I think this is a dilemma. 
Regular loans such as FHA - conventional - etc have their own standard contracts and I just cannot foresee any lender changing that document.  Having said that, private lenders (I work with a bunch of them)  would be suspect of why you wanted that provision.  I think the mere suggestion would make them run. 
??
Maybe I'm wrong but this is off the top of my thinking cap.
Never heard of it ... perhaps it does not exist.
Maybe ask a real estate attorney?

Sincerely,
Celia

  • September 14 2010
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