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After some painful discussions I was able to take away some potentially good information from this forum.
Is it possible to form an llc and purchase a primary residence under a non-recourse loan if it is a conventional loan (ie 20% down). This would be a very attractive option for me to limit my liability in a forclosure situation where I would only loose my 20% and nothing more.
That way if I lost my job I could determine if I could sell the property without writing a check and get some of my 20% back or just let the bank take it and walk away assuming it was under water more than 20%.
This seems like the most prudent way to own a home if you don't want your other personal assets being attached if crap hits the fan.
Also if that is not possible is it possible to negotiate personal non-recourse loans if it is conventional. Owning a home is not so important to me that im willing to loose everything else I have if things go south.
If you're that worried about things going south renting seems a much less complicated option especially if you're not going to get the tax benefits, etc. of primary residence status. AND you don't even have the 20% at risk. Renting is a far more sensible choice for a lot of people contrary to what the real estate industry would have us believe.
Short answer is that no, you can not do it. Even if you put 20% down the bank wants to see a steady stream of income from the LLC...If you personally guarantee the LLC then yes you could do it, but then your assets are up for grabs again b/c you have a personal guaranteed.
It costs money for a bank to sell a house, they just want to make the loan and get the payments...contrary to so many people's beliefs banks do not want to foreclose.
Short answer is that no, you can not do it. Even if you put 20% down the bank wants to see a steady stream of income from the LLC...If you personally guarantee the LLC then yes you could do it, but then your assets are up for grabs again b/c you have a personal guaranteed.
It costs money for a bank to sell a house, they just want to make the loan and get the payments...contrary to so many people's beliefs banks do not want to foreclose.
Great advice from Mark.
I would guess if that LLC was an on going functioning LLC who was in the business of investing in rentals and had an income stream, the bank would loan them money.
But to just start one with no income or assets would be just like a person with no income, job or assets.
The lender will treat them just like they will treat you as an individual.
Um Maybe I am missing something but if you want to purchase a home with a non-recourse loan and think that you can protect your assets by buying as an llc but with a non-recourse loan your assets are already not at risk because the banks only action is to take the home in foreclosure and they can not sue you. So problem solved you don't need the llc.
I have heard mixed results on banks being able to sue for deficiency judgments. I know some states are full non recourse and other states are recourse and some states are in between. I don't think the mortgage itself is by nature non-recourse otherwise we would not hear about such things as deficiency judgments.
Also could I put all my other assets that are paid for into an llc and protect myself that way or is there precedence of those assets being exposed anyways?
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YEs
