Build Wealth by Using Leverage:
Investing in Real Estate with a
Non-Recourse Loan

A Self-Directed Checkbook IRA or Solo 401(k) non-recourse loan gives investors the unique opportunity to build retirement wealth by using leverage. Non-recourse loans open the door to a variety of real estate investment options including commercial, industrial, residential, and multi-family properties, that may otherwise be unattainable without borrowing funds. Explore how you can use leverage to invest in real estate with your IRA!

Real estate investment key with a red house as the keychain in a door’s lock to show how a non-recourse loan can help Self-Directed Checkbook IRA account holder acquire a real estate investment.

What is a Non-Recourse Loan?

A non-recourse loan is a loan in which the borrower (your Self-Directed Checkbook IRA) is not personally liable for any outstanding debt on the loan. This type of loan is typically used to diversify your investment portfolio and build wealth through financing a real estate investment. A non-recourse loan benefits the borrower because in the event of a default, only the collateral (typically the property purchased with the non-recourse loan) is liable, not the IRA or its account holder.

A non-recourse loan allows you (the Self-Directed IRA account holder) to:

Diversify your investment portfolio with real estate and grow your retirement savings

Title the property and the non-recourse loan in the name of your Self-Directed Checkbook IRA

Secure the loan with the property itself, not the IRA or its account holder

Select the non-recourse loan lender of your choice to issue a loan to your IRA

Protect your other IRA assets and your personal funds, since only the collateral can be foreclosed if the loan payments are not met

How Your Self-Directed IRA Benefits from a Non-Recourse Loan Infographic. A non-recourse loan gives you the opportunity to: - Diversify your portolio - Invest in the property of your dreams with borrowed funds - Protect your other IRA assets and personal funds in the event of default - Enjoy tax-free or tax-deferred growth in an IRS-compliant account - Gain control of your financial future

Non-Recourse Lending Program

At Broad Financial, you will receive personalized service from start to finish. Our real estate investing expertise and unparalleled customer service matched with a five-star non-recourse lender gives you a simple way to invest in the property of your choice. Visit the Case Study How To Invest with a Self-Directed Checkbook IRA Non-Recourse Loan for further information regarding our preferred lending partner’s terms and non-recourse loan options.

Self-Directed Checkbook IRA Specialist explaining on paper non-recourse loans and the lending program details to real estate investors drinking coffee.

Interested in learning more about leveraging your real estate investment?

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How To Invest in Real Estate with a Non-Recourse Loan

Open and Fund a Self-Directed IRA

First, you'll complete Broad Financial's easy online application. Simultaneously, you'll open a new
Self-Directed IRA with our sister company, Madison Trust. To fund your Self-Directed IRA, you'll transfer or rollover funds from an existing retirement account, such as an IRA or 401(k), or make an initial contribution.

Establish an IRA LLC and Dedicated Checking Account

Next, Broad Financial will create a specialized,
IRS-compliant LLC for your IRA and take care of the paperwork. Once your specialized LLC is created, you will open a checking account in the name of your LLC at the bank of your choice and instruct Madison Trust to send your IRA funds directly to your IRA LLC checking account.

Identify an Income Producing Property

Consider the type of property you would like to invest in with your Self-Directed IRA. You can invest in residential, commercial, industrial, or multi-family properties with our preferred lending partner.

Apply for a Non-Recourse Loan with Our Preferred Lending Partner

Schedule a call with a Broad Financial Specialist and we will connect you with our preferred lending partner – at your convenience!

Bank will require the following:
• Letter of Intent to purchase and/or Purchase Agreement for the subject property
• Three years business tax returns or financial statements on the to be purchased property and/or pro forma
• Rent Roll (if available)
• Pictures and/or current listing of property

Execute a Purchase Agreement in the Name of Your LLC

As the manager of the LLC, you will sign the necessary paperwork involved in executing a Purchase Agreement. The Self-Directed IRA LLC will be listed as the buyer. After, you will send funds from your IRA LLC checking account to place the deposit on your property.

Close on the Property and Loan

With your IRA LLC, you can invest with the power of checkbook control by simply writing a check or sending a wire from your LLC checking account to fund your down payment of the investment. (All payments are made from your Self-Directed IRA LLC checking account, not your personal bank account). Then, the lender will schedule a closing with the title company, provide documents to be completed, and fund your transaction.

Do you have questions about investing in real estate with a
non-recourse loan?

Contact a Broad Financial Specialist today to discover your options.

Schedule a Call

Non-Recourse Loan - FAQs

Can the properties acquired with a non-recourse loan be held in an IRA LLC?

Yes! The IRA LLC gives you real-time access to your retirement funds. Please consult with the proper tax, legal, loan, and financial advisor or Self-Directed IRA Specialist to determine the strategy most applicable.

What is the processing time for a non-recourse loan?

Typically, depending on the title work, the process takes 3-6 weeks from application to closing. The approval for the loan occurs within 7 days.

What terms are available?

The non-recourse lending program allows for the following terms:

• Loan Term: 3-5 years
• Amortization: Up to 25 years

What are the loan amounts available and other non-recourse lending program features?

Broad Financial’s preferred lending partner offers the following lending program details:

• Loan Amounts: $100,000 - $499,999 (will consider larger requests)
• Loan Rate: Prime +
• Loan-to-Value: 65% ±
• Debt Service Coverage Ratio: 1.25% +

What are the fees for a non-recourse loan?

Below is an approximation of the fees for a non-recourse loan.

• Origination Fee: 2%
• Closing Costs (title, filings, etc.): typically between $2,500-$5,000

Are there any tax implications for non-recourse loans?

Self-Directed IRA investments generally grow tax-deferred (Traditional IRA) or tax-free (Roth IRA). However, the portion of the income acquired through borrowed funds is taxable. The earnings attributable to the leveraged portion are subject to UDFI (Unrelated Debt Financed Income) and the filing of Form 990-T is required.

If you intend to use a non-recourse loan to finance your IRA investment, it is recommended to speak with a tax professional to discuss possible tax implications and ensure this investment makes sense for your retirement investing strategy.

Still have questions? Don’t worry, we have answers!

Reach out to us to get a free consultation from a Broad Specialist.

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Build Wealth by Using Leverage:Investing in Real Estate with a Non-Recourse Loan