| If you did not know you could do this you do not | | | | So what could make this attractive to those who |
| need to feel alone. Every day I receive an email | | | | invest their funds on the lender's side and the |
| or phone call from even professional investment | | | | people needing the loan to invest? Common |
| advisers who did not realize this was an option. | | | | ground of course! By leaving enough equity in the |
| Not too many weeks ago a professional | | | | property to marginalize the lender's exposure and |
| investment adviser came to me after a speech I | | | | by not requiring the borrower to qualify on their |
| had given at a large Chamber of Commerce | | | | personal merits we created the perfect solution |
| presentation and acted as though I was the | | | | for both lender and investor and this product is |
| goose who would lay the golden eggs. He works | | | | now available nationwide. |
| for a large, well branded company so I was just | | | | The non-recourse loan requires the investor to |
| as amazed that he had not heard of this | | | | have a minimum of forty percent of the |
| possibility. | | | | purchase price in their IRA. In other words if the |
| Several years ago I was introduced to the idea | | | | borrower has $80,000 in their account they |
| by a builder who was doing some work for me. I | | | | qualify for a $200,000 home. Thirty percent will |
| did not even realize at the time but my company | | | | be required as a down payment thus leaving |
| had done some conventional mortgages for him. | | | | enough equity in the property to make the |
| He explained to me that we had been doing only | | | | investment viable for the lender and ten percent |
| a portion of his investments because the others | | | | must remain in the IRA as payment reserves. |
| were held in his IRA. Wow, just like others who | | | | This shifts the full qualifications onto the property |
| just heard about this I was intrigued. I soon found | | | | itself. |
| out he was dealing with a local bank which was | | | | With the finalization of the qualification |
| later consumed by a mega-behemoth bank and | | | | requirements for this new and powerful real |
| their program that would allow this was | | | | estate investment tool were ready it quickly |
| terminated. Now it was incumbent upon me to | | | | became obvious this would be the "candy in the |
| provide my client with the means to proceed | | | | basket" to retired investors who did not need to |
| according to plans. | | | | financially commit themselves to the loan beyond |
| What was needed, the special "missing piece" was | | | | the thirty-percent down and monthly payments |
| a loan that would not endanger the IRA funds in | | | | which should easily be covered by monthly rent |
| the event there was a default on the property. | | | | received. The program additionally could be |
| But where could I get this? What kind of lender | | | | obtained with no prepayment penalty with a |
| would lend money and not be able to recover all | | | | slightly higher closing cost (1 percent) to be used |
| of their loan in the even of a default? | | | | for legal flipping purposes. |
| The type of loan needed is a non-recourse loan. | | | | Since the strength of the loan rests on the value |
| This is a loan that is secured only by the asset, in | | | | of the property itself the lender will choose the |
| this case real property of the small residential | | | | appraiser and will solely make the determination |
| investment type, and the equity in the property. | | | | whether it presents a good risk to the |
| If the borrower fails to be able to repay the loan | | | | transaction. Properties which need rehab are |
| the only way the lender can recover any of their | | | | generally not permitted though aesthetics and |
| investment is through the property itself. This also | | | | clean up is allowed. Properties which are in rapidly |
| created another unique circumstance that we | | | | devaluing markets also are not considered but |
| discovered when putting this deal together. If the | | | | there are so many fantastic deals right now |
| borrower cannot be held personally liable to make | | | | across the nation this is a tool, neé a |
| the lender whole in the event of defaulting on the | | | | weapon, you should have in your arsenal for real |
| loan then there is no reason for the borrower to | | | | estate investing. |
| personally qualify for the loan. | | | | To see if a property would qualify for a |
| Now we had the opportunity to create a lending | | | | non-recourse loan for an IRA investment is a |
| solution very unique to the circumstance: a | | | | very simple process by downloading a one page |
| non-recourse small residential investment loan | | | | form that doesn't ask for credit, employment or |
| specifically tailored for the investor purchasing | | | | banking information. You can download the |
| single family to four-unit investment properties | | | | non-recourse real estate investment loan form |
| using funds from their independent retirement | | | | from this link to see if a deal will qualify for this |
| account and qualifying only on the strength of | | | | type of loan. |
| their IRA and the property itself. | | | | |
