The Terry Hale Show Episode 12

Non-Recourse for  Cash Flow

TRANSCRIPTION

Hey, this is Terry Hale.
I just want to take a few minutes here
to talk about NON-RECOURSE LOANS.
What’s so amazing about our NON-RECOURSE STRUCTURE
and how it will benefit you to continue to do even more business
and make even more money.
Part of financing comes down to
typically personally guaranteeing a loan.
That’s called recourse financing.
When you go for recourse financing in commercial real estate,
they’re going to want to see a few different things.
One, they’re gonna want to see your track record.
Two, they’re going to want to see all your assets.
And there’s a reason why they ask for those assets,
which I’ll get to in a minute here.
But another reason that pursuing recourse loans
is not a great thing is something called your “debt to Income Ratio”.
Now, depending on how much income you actually have coming in,
that would support an actual bank.
Meaning, a conventional institutional loan.
If they’re going to go ahead and loan it to you,
or they’re going to say, “No, you get denied”,
you have to have a lot of income to support a lot of debt.
So how can we eliminate that process, you continue to grow,
continue to build your portfolio and continue to build wealth,
it’s called NON-RECOURSE FINANCING.
Now, NON-RECOURSE SELLER FINANCING is amazing.
Regardless if there’s existing debt on the property or no debt at all,
this technique works great. If there’s existing debt,
we wrap the existing seller finance note in first position,
we create a second note in the form of
a NON RECOURSE SELLER FINANCE note.
So what this means is that you’re not going to guarantee the first note,
because it’s already existing on the property.
More than likely, it’s a recourse structure.
That senior debt is secured by the seller,
the seller is going to keep the loan in their name,
create an additional second loan in the form of a seller finance non recourse structure.
So you’re not going to give a personal guarantee,
you’re not going to have your credit checked.
And that means your Debt to Income ratio does not get affected.
The reason why banks want to see exactly your assets,
why they want to know your portfolio,
they want to know about you personally,
is because chances are
they’re going to ask you to do something called
Cross-Collateralization. When you do something like
Cross -Collateralization, what they’re looking for are properties
that are assets that you own,
where you are going to be putting those up,
pledging those as part of the structure to lower the risk of the lender.
What we can do is avoid Cross -Collateralization.
Avoid credit checks, avoid personally guaranteeing notes
and doing a NON-RECOURSE SELLER FINANCED structure.
If you follow this rule, you can continue to do business
you can continue to build wealth without being in harm’s way.
The risky way of doing business is the old way of doing business.
Follow this structure of NON-RECOURSE SELLER FINANCE notes,
get out there, look for value, add plays, create cash flow,
create financial security for your family,
and build something called generational wealth, build that portfolio.
Alright, if you liked this segment,
go ahead and click the link in the description
or visit my website at terryhale.com
and I truly look forward to engaging with you again really soon.

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