IRA Non-Recourse Loans | SouthStar Bank Consider the following scenario: You want to buy real estate using your self-directed IRA. The non-recourse loan is applied for by your IRA or retirement plan and the debt is secured by real estate. Some of your IRA money and the non-recourse loan are used to purchase the property, leaving the rest of your IRA funds invested and earning interest. For example, let’s say you find an investment property for $200,000 and have $200,000 in your IRA. You don’t use all the money in your IRA, but maybe $100,000, then you can get a non-recourse loan in the name of the self-directed IRA to make up the difference. Your IRA now has $100,000 in it, which is earning interest and growing. These loans are often utilized to provide you with additional funds in the event that your property requires repairs or upgrades, or to invest in commercial real estate. Taking out a non-recourse loan allows you to diversify your investing portfolio rather than putting all of your eggs in one basket. It’s a huge win for you and your retirement account. By leveraging the bank’s money, non-recourse lending enhances your IRA. Furthermore, the IRA’s money is safeguarded and can be used for other investments. How Do Non-Recourse Loans Work? When you have a small IRA or just don’t have enough funds to invest in real estate, your IRA can get a non-recourse mortgage loan. The non-recourse loan is a loan in the name of the IRA, secured by collateral (usually the property being purchased). The loan is based on the value of the real estate investment and in most situations, the IRA holder’s credit does not play a role in the IRA’s eligibility. Borrow What You Need There is no minimum or maximum loan amount at SouthStar Bank. The loan is in your IRA’s name and the amount you can borrow is determined by the value of your real estate investment. SouthStar Bank offers non-recourse IRA loans for single-family houses and condominiums (2-4 units). Keep in mind that the property’s net operational income/cash flow must be sufficient to cover loan payments. A percentage of the purchase price must be vested in a self-directed IRA for eligible borrowers. Your non-recourse IRA loan down payment will be determined by the property you buy, its condition and estimated cash flow. A 40 percent down payment is usually required by SouthStar Bank. Non-Recourse Loan Benefits A non-recourse loan, as mentioned above, is a form of loan that you can take out using your IRA to buy real estate investments. Your IRA owns these loans, which are subject to UDFI (unrelated debt-financed income) and must be returned through your IRA. Non-recourse loans have other advantages than helping you finance your real estate venture. Your IRA, not you, is responsible for your loan When you open a non-recourse loan, your IRA owns it, not you, which means that you will not be held personally liable should anything happen over […]
SouthStar Bank specializes in residential mortgage, real estate and construction financing, operating 15 full-service branches across the Central Texas Region. Established in 1920, the bank holds over $700 million in assets and focuses on community involvement and personal relationships. The SouthStar Bank loan team is led by Executive Vice President Brent Gibbs. A Dripping Springs resident for over 12 years, Brent understands the value of personal connections and local lenders. Assembling a qualified team, unique to the communities they serve. “I’m a people person first, and that’s a motto that resonates throughout our organization. We understand our clients and business partners are busy, and we want to do our part to get the deal done with a satisfied borrower.” The Bank has helped thousands of people realize their dream of home and real estate ownership. Whether you’re a first-time buyer, building your dream home, purchasing recreational property or simply need home equity cash for life’s expenses, SouthStar Bank is the partner you can count on. With 6 Austin-area locations, it’s all about serving the community. “Business comes from where we live, work and play,” says Gibbs. “There’s a good chance the borrower ends up being my son’s teacher or t-ball coach, which means I owe them in advance.” Their team of lenders takes this guidance to heart, providing superior customer service. Loan officers are ready to walk clients through the process and ensure they benefit from the best financing solution. Ever-changing regulations and unexpected life events can make it difficult for qualified borrowers to secure the loan they need. That’s why in addition to traditional home loans, SouthStar Bank offers what they call ‘flexible, common-sense mortgage solutions.’ Through in-house portfolio loans, the Bank is able to offer solutions based on a borrower’s full financial picture, not just credit score and your traditional secondary market check points. It also allows the Bank to offer a wider range of products including lot loans and construction financing with one-time close. Whether your client is selecting the perfect lot, building a new home, or both, SouthStar Bank can provide the financing they need to get started. While SouthStar Bank is continually striving to offer the very best in service, convenience and security, their founding commitment remains the same: To provide friendly, flexible, common-sense financial services where they live and work – Texas Style!
Tyler Lee will join the SouthStar Bank Georgetown Branch as Vice President of Lending. With over 20 years in the financial industry, Tyler’s experience allows him to help clients in many different aspects of their life, from consumer home loans to SBA and commercial real estate lending. Tyler Lee NMLS#614284