Non-Recourse Loan Makes It Happen! No comments yet

It was an REO.  You know, the real estate is now owned by the bank?! My client found a property that sold for $375,000 in 2006 and wanted to by it with his IRA.  Purchase price? $195,000.  That’s right - a great buy!  However, there were some stumbling blocks before we could make that happen.  The main hurdle was the bank that grants the non-recourse loan is hesitant these days about California property that’s not already leased.  How can you lease a property that you haven’t purchased yet, and needs some fixing up before you can show it for rent? Catch-22! The bank wanted 50% down if the property wasn’t leased prior to the purchase. Lending Resources negotiated on behalf of the buyer to put down 40% and 10% in an escrow account until the IRA owned property is leased at which time the 10% would go back to the IRA.  This way the buyer would have time to spruce up the property and get it rented without committing an additional $19,500 towards the purchase price. The bank agreed, the buyer made the purchase and a non-recourse loan was put in place for $117,000.  The buyer’s investment was secured with his IRA funds as the down payment.