IRAs cannot guarantee or be used as collateral for a loan; therefore the loan must be non-recourse, meaning the lender’s sole source of recovery in the event of default is the property serving as collateral for the loan. If your IRA cannot repay the non-recourse loan, the non-recourse lender can then take title to the property as recourse for the default, but cannot access your IRA or other personal funds.
A non-recourse lender is a financial institution or private lender that grants mortgages secured solely by the investment property as collateral. If the borrower defaults, the issuer can seize the collateral but cannot seek out the borrower for any further compensation, even if the collateral does not cover the full value of the defaulted amount.
This is an advantage an IRA owner has because the owner does not assume personal liability for a non-recourse loan.
UBIT Professional has compiled a list of non-recourse lenders that may be willing to assist you in securing the financing you need, enabling you to acquire more revenue-producing real estate. The following information was provided to us by clients that have non-recourse notes with these financial institutions. We do not endorse or have any affiliation with any of these lenders. UBIT Professional clients are free to use or not use any of the names on this list and are encouraged to perform their own due diligence and research before making a decision.