Recourse Vs. Non-Recourse Loans & a Surprise!

Caeli Ridge recorded this episode on 7/25/2023

Recourse vs. Non-Recourse Loans

Caeli provides an overview of what recourse and non-recourse loans are and in what situations you would choose one over the other. She details that the difference in rates and terms between the two options is significant, and that she does not see a place for non-recourse loan options in most cases as it pertains to real estate investors purchasing 1-4 unit residences. 

Caeli's surprise is an exciting new loan option for Ridge Lending Group that Caeli has been working tirelessly to secure for our borrowers. 

Q&A throughout the episode on these topics and more!

Check out the video with the screen share and the documentation in the Community.

You can join these live each week by following this link to join the call:
https://community.ridgelendinggroup.com/events/live-with-caeli-each-tuesday-beginning-at-430-pm-et/list

As always, give Ridge Lending Group a call if you have any questions at 
855-747-4343 or email us at info@RidgeLendingGroup.com

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Transcript

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Karlie Libby: Hello, everyone Welcome to calling all real estate investors. We are here every Tuesday from 1 30 pm. Or 4 30 pm. Eastern standard time. today, Caeli is going to be going over recourse verse, non recourse loans, and I think we're going to have a little surprise sprinkled in there as well. So stay tuned for that.

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Karlie Libby: and thank you so much for being here.

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Karlie Libby: If you have any questions throughout this call, please go ahead and drop those in the chat, and we will get them answered as soon as possible. So yes, we love your participation. Anything. All questions please. Put those in the chat.

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CAELI RIDGE: and then I'm gonna hand it off to Caeli. Thank you so much. Thank you, Miss Karlie. Hi, guys as always, thanks for being here with me.

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CAELI RIDGE: So I was thinking about this today, and I wanna, I want to take a minute. And and I kind of have an open form for anybody that wants to participate. This is totally unrelated to

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CAELI RIDGE: so mortgage or to real estate investing. But this is a nice platform in which I can ask some questions about some things that I'm observing, and I'm just interested in

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CAELI RIDGE: some opinions just from from, you know. colleagues, people in a in a space that I occupy, so I hope you'll forgive me again. Totally unrelated to anything that we would be otherwise talking about.

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CAELI RIDGE:  there's a few things has anybody noticed? And and this is going to be a little bit of a dig. Gen. Z. So anybody that's in that that age group. I don't think there's probably too many of you. But any of you that in in that age group my apologies in advance this is not meant to be offensive. I have 2 of my own

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CAELI RIDGE: that I've just recently, you know, launched both. They're both now out of my house.

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CAELI RIDGE: And I actually, Lisa, I was talking to you a little bit about this a couple of weeks ago. First of all,

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CAELI RIDGE: the the language barrier. I think there is an epidemic. going on right now with the word like. Has anybody else noticed that the word like as a as a use, a place filler for for conversation, because they don't maybe have

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CAELI RIDGE: the they don't have the words to use. yesterday last night I was out to dinner with my husband, and we were sitting next to a group of girls.

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CAELI RIDGE: and I I was overcome by I could not believe

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CAELI RIDGE: how many likes, and I started to count, and it was just such a ridiculous thing. Is anybody getting this or picking up on

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CAELI RIDGE: how often that word in conversation is used inappropriately? They're not saying I like ice cream or anything like that. Anybody I mean anybody getting a feel for the that at all, because it's it's

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CAELI RIDGE: I think it's such a a drastic

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CAELI RIDGE: difference to how people are communicating, and it's not good. It is not good. If I had an interview with any one of those girls, I mean, I would be done in inside 5 min, and and I would never, ever.

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CAELI RIDGE: How are they gonna be employed? I mean, how are they going to survive and and talk that way? Does anybody have anybody seeing this? Is it just all on me? That's the first part.

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CAELI RIDGE: And Carly, can we? Is there any way that we can just get rid of the they have to ask to unmute?

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Karlie Libby: yeah, no, definitely, I can get rid of that. And we do have a couple of comments, so Walt, says he, he years a lot of like and sweet uses filler words, and Charles says all the time he he he hears this. Lisa says Valley girls always said, like, you know, whatever

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CAELI RIDGE: it yeah, Teresa said, it's it's overused. And and Lisa actually says she doesn't feel like this is a new phenomenon. So I actually agree with you, Lisa, I feel like it's been going on for a while I think it's just gotten so so bad. I know that in our house because it it yes, I have heard it. My kids are are now both in college but in our house, when their friends would come over, it didn't matter who it was they would be doing push ups or or putting a quarter in the in the jar if they use it in an inappropriate way. So we tried to curb that

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CAELI RIDGE: at a very early age when I started to hear it. But I just think it's out of control now the second thing is, and then I'll get off this, and I'll I'll move on to to what you guys are here for. I just, I'm very interested to get some feedback, because I'm you know, guys, I live in in kind of a box I'm I'm singularly focused in the space that I'm in, and and I don't get out much. So I'm really curious. If you guys are seeing this out there in the service industries, especially.

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CAELI RIDGE: there isn't anybody that is mentoring this generation from a workforce perspective. and I'm finding that you know, wherever it is, whatever it is, when you need to be you, you're being served in a restaurant or on the phone, or it doesn't. It doesn't even matter

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CAELI RIDGE: But there has to be some customer service involved

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CAELI RIDGE: that they just are clueless. And they I I can feel that they feel it. They feel that I feel it. And it they just don't they? The training isn't there? And I I I'm really

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CAELI RIDGE: trying to impart to my kids that necessity is the mother of all invention. Right? Somebody needs to step up and and help take control, especially on a corporate level and provide some kind of mentorship or training for this young Gen. Z. Because I feel like they don't have that. Is it just me? Is anybody else feeling that when they go out and about in the world.

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Rev. Jamal Tharp: I'm really fortunate that I have a 20 year old in the

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Rev. Jamal Tharp: 16 and 15 year old, and they're both really industrious, hard workers, my 20 year old, where she just went into Michael Cores, and simply because she's bright and aware and can connect with people. The manager came up and said, Can I hire you? Gonna give her her attire and

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Rev. Jamal Tharp: a a commission on top of great pay, and she has those experiences, she says everywhere she goes, and what I can tell you is, she's just simply a present young person, and I do think that they're rare from what I can tell And when she went to a very expensive school for a year, which she didn't quite fit culturally.

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Rev. Jamal Tharp: everybody was like like, like like. Now she goes to community college and holds down 3 different jobs and is, you know, loves it because she says she's around the diverse group of people. we mean not just

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Rev. Jamal Tharp: her age and people who are more interesting. So

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Rev. Jamal Tharp: I I yeah, I do think it's sad that

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CAELI RIDGE: but I I also think it might have to do with maybe the lack of engagement, of conversation with people outside of I think that's exactly right with phones and social media and the abbreviation of of text and everything. I think that's true. Thank you, Jamal, for for that. Input I really appreciate it.

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CAELI RIDGE: yeah, I I think that it is the exception. And I think, the the younger generation is is gonna get stuck. And I think I hope somebody. Maybe maybe one of my kids with my harping on them can come up with some solutions to help

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CAELI RIDGE: bridge some gap, anyway. Okay, sorry. Okay. I know that was so random. But you guys are the only people that I really get to talk to collectively, and I can't really have this as a one on 1 one on one conversation with our clients during the day. They'll think I'm crazy. So you guys get to think I'm crazy. okay.

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CAELI RIDGE: let's get on with what we're here to talk about. Last week I had said, we're going to talk about amortization versus interest, only I have yet to become prepared for that for you. So I change the topic, and we're going to talk about recourse versus non recourse. I had asked some people in the office, what questions that we're getting, and that one's coming up a lot.

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CAELI RIDGE: So just to quickly go over some of those differences, and why? It's important to know the differences. Then I'll get into my surprise. I think if you read the headline, I've got something exciting to share that we will finish the the half hour with

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CAELI RIDGE: recourse versus non recourse. So the difference is very simply whether or not you're obligated to the debt individually obligated to the debt, and where it can be most important is when we're talking about those golden tickets, the Fanny Freddie's

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CAELI RIDGE: for those of you that are not aware. We call Fanny May Freddie Mac. Conventional agency, conforming loans, whatever you want to call it, the golden tickets, because these are going to give you the highest leverage at the lowest interest rates on the planet

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CAELI RIDGE: and the guidelines for that. Say that you cannot have more than 10 finance properties per qualified individual. Okay, that's what Fanny and Freddie say.

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CAELI RIDGE: So. The definition of what counts against those 10 are as follows, and this is where people get tripped up a little bit. so first of all, it's residential. Only single family up to 4 unit. If it's a commercial property, 5 unit or a retail space or a strip mall, or whatever does not apply. This is only applicable to residential property

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CAELI RIDGE: that is leveraged, that is, alone on it in your individual name, or personally guaranteed by you. Very commonly, almost daily, people think that the loan that they secured in their Llc. Name a year or 2 or 5 or 10 years ago, where both the loan and title close in the Llc. Name

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CAELI RIDGE: would not count against the Fanny Freddie 10. Well, that is not true. If there was a personal guarantee associated with that commercial loan. If there was a personal guarantee, and we would find this via the note

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CAELI RIDGE: that you signed a closing, then that absolutely will count

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CAELI RIDGE: against the Fanny. Friday. 10.

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CAELI RIDGE: Okay, so very, very important distinction. those people that that have 30 properties. They're all mortgaged, and they think that they have all their golden tickets left because they were all secured by using an Llc. But come to find out. They all have personal guarantees.

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CAELI RIDGE: Those people cannot get or not eligible for those, Fanny, Freddy. They'd have to refinance those commercial loans into what's called a non recourse, where both alone and title close in the entity name. But there is no personal guarantee. Okay, now let's talk about kind of the differences between those 2 things.

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CAELI RIDGE:  You know. I was, I was emailing a client earlier on this topic had come up. He was saying he didn't want to have the loans show up on his credit report. And I I wanted to dig a little bit further and kind of understand why, what was the method of his need for this, and if it's exclusively asset protection, you guys

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CAELI RIDGE: then I would tell you that having it on your credit report or not, probably. Isn't that big of a deal. I'll come back to that. Let me finish my thought on on recourse versus non recourse.

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CAELI RIDGE: The circumstances when I think non recourse is appropriate or applicable is really going to be for those multi 1 million dollar transaction types. You know, a hundred unit apartment complex or 500 unit apartment complex. That's when a non recourse loan, I think, is going to be most appropriate.

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CAELI RIDGE: Let's go back to recourse. And what that really means. If you've signed a personal guarantee. That means that in the event of default, technically, the lending and to T or the servicer can come back and attach assets for their losses. Right?

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CAELI RIDGE: That is true, and it is written in your loan documents that way. However, I would share with you guys that in the 25 years that I have been doing this in the event of default, which is pretty rare. But let's just say that you did default on the loan the amount of times that I have seen a a lender go back and attach

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CAELI RIDGE: the individual.

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CAELI RIDGE: It would be a Fr. I think. I think I've even only heard of it one time, and that one time exception was because the property was in such disrepair I mean just completely gutted and and totally tore up. That was a circumstance that I had heard of. I wasn't even involved in the scenario where the lending entity went after the individual. Otherwise my point here is they just want the property back

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CAELI RIDGE: right? They're not. Gonna they. They just want to get their property back as quickly as possible in the event of default. Get it ready and resell it.

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CAELI RIDGE: Okay, attaching you and your assets? even on a recourse loan. I suspect, would be an extremely extremely rare proposition. So why is this piece of intel important?

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CAELI RIDGE: The difference in rates and terms between recourse and non-recourse are pretty substantial.

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CAELI RIDGE: If you truly believe you need a non-recourse loan.

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CAELI RIDGE: Okay, there's no personal guarantee. It is in the entity name only. that's fine. But then you need to be prepared for a balloon feature right where, at the end of 5 years or 10 years, or something, the note is due, or maybe it's an adjustable rate. Mortgage extremely harsh prepayment penalties on a non-recourse loan, and the interest rates are going to be, you know, upwards of 2% plus higher than anything else that you're going to get.

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CAELI RIDGE: So keep in mind that if, in deciding between recourse and non-recourse, you're dead set on that non recourse, what does it actually mean for the bottom line of the investment. And what are you really getting out of that?

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CAELI RIDGE: Okay, any comments, questions about any of that guys, anybody

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CAELI RIDGE: recourse, non recourse, how it applies to the Fanny Freddy golden tickets.

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CAELI RIDGE:  general rule of thumb. The further away you get from skin in the game, the higher the the rate, and the less attractive the terms are going to be, and that would be applicable to non recourse. If you look at the spectrum for you know best rates and terms on investment, real estate, and then the worst. A non recourse is going to be

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CAELI RIDGE: the the highest rate and the least attractive terms

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Karlie Libby: here from Walt. he asks, does a Dsc. Our loan fall under a non-recourse?

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CAELI RIDGE: It could sure well, but more often than not, debt service coverage ratio loans most most of the loans that you guys are going to be looking at. I'd say the vast majority are going to be recourse, whether it's debt service, coverage, ratio, or it's a full income documentation. If it's written to the entity name.

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CAELI RIDGE: If the loan is written to your Llc. Name and your closing title in the Llc. Most of those are going to be recourse anyway. Most of them come with a personal guarantee.

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CAELI RIDGE: and certainly yes, the debt, service, coverage, ratio can fall under that. But non-recourse certainly can can apply to debt service, and completely without the personal guarantee.

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CAELI RIDGE: to the entity.

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CAELI RIDGE: Anybody else

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CAELI RIDGE: anything recourse, non-recourse. So I guess, just to summarize what I would say about this.

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CAELI RIDGE:  I I don't see a place for for non recourse, unless it's very, very specific set of circumstances that actually benefits you. I think you're going to be better served

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CAELI RIDGE: with. If you, if you just you want the

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CAELI RIDGE: the loan in the entity name. If even that is super important to you, fine sign the personal guarantee. Get those significantly better terms, because at the end of the day, in the event of default, they really just want the property back. Okay.

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CAELI RIDGE: I'm going to preface by saying I'm not an attorney, and I'm not giving anybody here legal advice to be clear.

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CAELI RIDGE: There's there's that and and just to to go backwards real quickly

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CAELI RIDGE: if you have golden tickets and your intention for having the properties holding the properties in the Llc. Name. If it's exclusively for asset protection.

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CAELI RIDGE: there's no reason that you should not secure, and you can qualify.

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CAELI RIDGE: There's no reason that you shouldn't secure those Fanny, Freddy loans and maximize those golden tickets, because, if if the need for the entity is exclusively asset protection. You can simply execute the quit claim. Deed, qu it. Quit claim, bead. Sometimes it's called a warranty deed. After closing

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CAELI RIDGE: into the L. L. C. Name

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CAELI RIDGE: without that do on sale clause that is old thinking old philosophy do on sale. Clause does not apply to Fanny Freddie any longer. As long as you. The one obligated to the debt has the majority ownership in the Llc.

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Karlie Libby: We do have a question here from Armando. he asks. Will we talk about options once we've exhausted our 10 golden tickets or 20 golden tickets, if they're married.

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CAELI RIDGE: Yes, thank you, Armando, for the question. your so

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CAELI RIDGE: kind of looking at it from the lens that we want to maintain. You know, when we go from from the Fanny Freddie's, which we've already determined golden tickets. Right? Those are going to be your best options for terms and rights, etc. The next step is going to be on the non. Qm, non- Qm. Stands for qualified mortgage. Fanny May, Freddie Mac.

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CAELI RIDGE: Okay, they have those that 10 Max requirement. Now we're going to move into non- Qm. Has debt, service, coverage, ratio, bank statement loans, asset depletion loans, but it also can keep going full. Doc.

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CAELI RIDGE: Right remember, I said just a second ago, the more skin in the game you have the better the terms are. So if you're if you've already maxed out your golden tickets, and you just want to continue down that kind of that lane or that path. You're going to go into. Non-qm. And you're still going to supply all of your income documentation, etc.

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CAELI RIDGE: Okay, you're going to close the loan in your individual name.

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CAELI RIDGE: These loans will allow you to close title in the Llc. Name.

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CAELI RIDGE: So Fanny Freddie, both the loan and title close at closing in the individual name you would quick claim into the entity name after closing Fanny Freddie, non Qm. Most of the time is going to close in your individual name. Not always, but most of the time we'll close in. Your individual name

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CAELI RIDGE: and title can close in the entity name. You don't have to do the quick claim deed.

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CAELI RIDGE: Okay, best rates and terms past the Fanny Freddie. 10 are going to be non-qm. Full-income documentation. There is no longer a restriction to how many finance properties you can have a Non-qm. But it's going to be. It's not. It's not federally guaranteed. You don't have the United States Government guaranteeing that mortgage backed security against default. Right? It's a separate set of investors. So the interest rates going to be a little bit higher.

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CAELI RIDGE: but

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CAELI RIDGE: that would be your your next best. So from going from Fanny, Freddy full Doc. Non. Qm. Closing the entity in the title title in the Nt. Name loan is still in your name. But but even if we go outside of that

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CAELI RIDGE: outside of the Non-qm. We have products that will allow you to close the loan and title in the Llc. Name, but that is one tier or one step further from

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CAELI RIDGE: the rates and terms

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CAELI RIDGE: on the non-qm, full, Doc, right? You guys following me. So if you think about a spectrum and the further away you get from full income documentation files of blood and DNA samples, and the entity name and a personal guarantee. The further away from that we get

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CAELI RIDGE: the the less attractive the terms are going to be, and we have all of it. It's really going to be specific to your own set of circumstances where you are right now, where you want to go next year, etc. That'll help us decide which one of those buckets you're going to be focused on at any point in time. Thank you for the question. Anything else? Carly? Yeah. Another from Armando. Yes. Will we still be required to show income and expenses on all properties? mortgage statements, lease agreements, etc.

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CAELI RIDGE: only if you want the the best terms, and that non Qm. Space. But no. So non-qm. Again, just by itself as a as a product line has lots of different individual loan programs inside 9 Qm. The best of those are going to be that you would supply all of those documents right. Just like you would, Fanny. Freddy!

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CAELI RIDGE:  if you didn't want to do that inside. Non-qm, as well. We've got debt service coverage ratios that say no no income documentation is going to be required. It's really more about your assets. You have your your cash to close

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CAELI RIDGE: and your credit score. My credit score will will ultimately just determine largely what kind of interest rate you're going to get. The debt service of the property plays a big role there, too. But I think that answers your question, Armando. If not, please, type in another one.

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Karlie Libby: let's see. So we have a question from Lisa. She has a quick question on what you were just talking about, because she was told that She had to close in her personal name and then quick claim to her trust. for a non. Qm, and is that correct?

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CAELI RIDGE: depending on the product that we're talking about? It could be. But there are products as well that you can close in the entity name at closing, so the terms might change lease. But yes, you could do that. So I think, looking at them side by side, and and seeing what is your preference? So if it means you've got

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Lisa Brubaker: it might be the. It might be the product that I have then, because she said I could do it like, said part of the same closing, but then it had to originate in my personal name, and then I could quick claim it to the trust.

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Lisa Brubaker: But I can't do it. I can't close in the trust

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CAELI RIDGE: it it definitely could be. But let's make sure that we're we're distinguishing between. The loan is probably closing in your name

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CAELI RIDGE: and title at closing when you're signing your loan. Documents can be titled in the entity name or the trust name.

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CAELI RIDGE: Correct? That's what. Yeah. That's why my title. I'm sorry. Yeah, yeah. Okay, so that's yes. Then that's absolutely the product. And I'm gonna recommend. That's probably what you want to do. Because, remember. So maybe I'm not explaining this in in the best way possible. So let's take Lisa's example. Okay, she is closing on a product where the loan is going to be in her individual name, Lisa Brubaker. Okay, this is a non Qm product that will allow her at closing

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CAELI RIDGE: for the title to close in the entity name.

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CAELI RIDGE: So Loan is in her individual name title, when she's signing her documents will be in the name of the entity

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CAELI RIDGE: that is going to be better terms than if we were to find a loan that is going to close the loan in the entity name and title in the entity name. But chances are that product is going to sign a personal guarantee anyway.

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CAELI RIDGE: So you personally would be on the hook anyway. So the difference between that

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CAELI RIDGE: and what we're structuring over here, where the loan is in your individual name is

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CAELI RIDGE: pretty much 0, I think the one difference would be is that the one that's going to close in your individual name will show up on your credit report.

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CAELI RIDGE: But who cares? What difference does that make? And if it's for asset protection, if the entity is for asset protection, anybody that is going to to the trouble of to Sue. You wouldn't have access to your credit, anyway.

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CAELI RIDGE: They'd never have access. They they wouldn't know what was on there. They're going to be doing title searches to find out what assets are in your individual name?

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CAELI RIDGE: Did I answer your question? Li.

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Lisa Brubaker: yeah, I'm going to email her because she specifically said that I had to arrange for the quick plan. She specifically said that I had a quick claim that we had to close in my name, and but I don't know what we could be talking about different products, and I don't want to.

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Karlie Libby: You have another. we have a question here from Chris, can you generalize on the spread of rates between the range of products? Qm. To non-qm. To Dscr products?

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CAELI RIDGE: Thank you, Chris, this is a very good question, and and I'm afraid that the answer is going to be a little bit convoluted, because within each of those answers are are 20 different variables that could change the range. So I'll I'll do my best.

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CAELI RIDGE:  actually, let me start this way the lowest possible rate I think you're going to find for an investment property. And remember, you guys, the variables of the transaction greatly dictate the rate, regardless of product, right loan to value loan, size, property, type, purchase versus refi credit score. All of those things have very specific changes to the interest rate. So I'm going to go lowest possible

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CAELI RIDGE: interest rate, and I'll take it up to feasibly, maybe the highest, and then I'll try to break it down in between

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CAELI RIDGE: So right now the best possible scenario rate, I would say that you maybe would get into the this low sixes, maybe the high fives. But you are leveraging maybe 50. You are completely full, Doc. it could be

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CAELI RIDGE: There's probably a buy down buy down of the rate associated with that in in that kind of rate range. That's your best case scenario. And it's almost certainly a conventional product. Or maybe it's a credit union product.

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CAELI RIDGE: worst case scenario

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CAELI RIDGE: institutionally speaking for investment residential investment.

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CAELI RIDGE: And I'm not talking bridge long, because that would add a whole whole. Another layer. We're talking about more of a long term, you know. 5 year arm, 5 year fix to 30 year fixed, you probably

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CAELI RIDGE: 1011% right? That's going to be the range between maybe the best and the the highest

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CAELI RIDGE: And then in between. When we talk about the full Doc and the debt service coverage ratio, non. Qm. Qm. Recourse non recourse right? It starts to get real convoluted.

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CAELI RIDGE: Add anywhere from a point to 2 points in each one of those buckets. Chris, if you want, we can have a a quick one on one call, and I can. I can layer that out a little bit easier or more.

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CAELI RIDGE: directly. If we have a scenario that we can work from. Let's say that we. We take one

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CAELI RIDGE: one particular purchase at these different variables, and then I can say, Okay, if it was in this bucket, this would be the approximate rate. And then we can kind of go up from there and and be more specific if that's helpful. Just ping me. Chris. Okay, anything else, Carly?

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Chris Barrett: That'd be great. Thanks. Yeah. You bet.

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Karlie Libby: that's all questions. For now, I think, yeah.

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CAELI RIDGE: The surprise

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CAELI RIDGE: with a few minutes to spare. Okay. So I have been working tirelessly to try to expand the products that we we have offering for our our investors. And while it's already fairly diverse, I think.

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CAELI RIDGE: I am very pleased to announce that finally this has been on my radar for many, many years. We now have ground up construction

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CAELI RIDGE: but the the horn, the the trumpets. Blair.  This has been largely missing for several years. It you know it.

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CAELI RIDGE: We used to do a fair amount of it way back in the day after the crash. Not so much. And then it just went away. I mean little legitimately gone, especially for for rental properties. They started to bring it back a little bit for primary residence. so I'm very pleased to say that ground up construction for those of you that are interested in that is back on tap.

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CAELI RIDGE: it's extremely brand new. We we have not even closed on one of these yet. We. We haven't even started marketing to it. But I'm going to share my screen and just kind of go over a few of the details and bullet points

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CAELI RIDGE: that will be associated with this. What did I do with it? Hold on, gang!

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CAELI RIDGE: Let's see if I can figure this out.

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CAELI RIDGE: Where did you go? Share screen.

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CAELI RIDGE: And there it is.

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CAELI RIDGE: Okay. So I had to Carly throw this together just before our call. So this is just a very quick overview of what you can expect. Carly, if you want just real quickly on the side. Anybody maybe take a poll of anybody that is interested in has been is, or maybe we'll be interested in ground up construction just to get a feel for whoever is on this call that might be in need of more information.

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CAELI RIDGE: So ground up construction. You guys can see these bullets. We'll put it on the community site, too, so you can grab it. This pretty self explanatory. I won't spend a ton of time on this 12 to 18 month terms. There's always room for extensions if you needed it. If the construction was delayed. For whatever reason, there'll be a cost almost always to extend

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CAELI RIDGE: up to 75% loan to cost.

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CAELI RIDGE: Okay? So for those of you that don't know what that is. You're gonna take the, you know, the purchase of the property

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CAELI RIDGE: and the cost of construction. Add those, together with the arb. and then 75% is going to be the cap there.

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CAELI RIDGE: 100% controlled construction budget. This means that it's going to be whether it's it's owner, builder, or it's a general contractor, etc. It's going to be extremely scrutinized. We're going to make sure we're going to have people on site, making sure that the

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CAELI RIDGE: The completion is is done to satisfaction before draws will be released or issued.

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CAELI RIDGE: Obviously no income documentation is necessary. On this it can apply to a purchase rate and term or cash out refinance. There's your rate ranges.

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CAELI RIDGE: minimum credit scores.

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CAELI RIDGE: I've seen us get around stuff like this in the past, depending on a variety of variables. You may not need this minimum if the the rest of there's compensating factors and the rest of the the scenario is very strong. You may not need that experience.

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Karlie Libby: Anything here, Kly, I don't know. Is that for me? Oh, I just started the poll. So go ahead and

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it has to be in a Us. Entity.

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CAELI RIDGE: We don't want to be in rural markets, and it's got to be shovel ready. So what that means is that it can't be raw land. Okay? So it's got to be improved plans and permits. Everything's got to be all ready to go. The the county

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CAELI RIDGE: has to have signed off on everything, etc.

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CAELI RIDGE: so yeah, that's that. I'm we're gonna be adding some other portfolio products to just expanding some of our bridge loans and and maybe our debt service ratio. I don't think that we had announced this. It's fairly new to we recently removed our non recourse, so as of today at one, excuse me, 201 Pm. The twenty-fifth.

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CAELI RIDGE: We are not offering non recourse on any of our cross collateralization, which was the only place that it lived before, anyway, for a few reasons, one non recourse comes with very, very harsh prepayment penalties, and we know that people are going to be refinancing more likely than not in the coming years. So it didn't make sense.

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CAELI RIDGE: And to. For reasons that I described earlier.

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CAELI RIDGE: the non-recourse terms are are so much worse than the recourse with a personal guarantee, and it just didn't make sense. So

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CAELI RIDGE: anybody that was interested in that.

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CAELI RIDGE: No, on for the moment. We're not offering on recourse. That was the only product that we had it for. And we're not giving it on that anymore. so yay, oh, I have something else to share with you. I have also been actively pursuing a self-directed Ira expert that we are going to have on

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CAELI RIDGE: one of our our coming up Tuesdays, and then a a portfolio partner is going to come on and start talking in more detail about some of the

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CAELI RIDGE: ground up and and debt service and bridge loans that we're going to be bringing on soon as well. So

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be looking for those announcements. Anybody else before we wrap for today?

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Karlie Libby: Yeah, we do have a question from Madu. they ask, can we use low alone to add on an 80 you

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CAELI RIDGE: the ground up construction? Yes, absolutely, Maddu. You can do that. Yes. So anybody that's interested in in adding, whether it's a purchase, or you own the property, and you you're refinancing to add the Edu absolutely. That works

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Karlie Libby: perfect. So I'm going to go ahead and end this poll. And then share the results with all of you guys.

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CAELI RIDGE: So you can go ahead and check that. You guys. Okay, so yeah, so so it looks like, you guys, there's a significant amount of you that are interested in in ground up. That's exciting.

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CAELI RIDGE: so probably the best case scenario is just to email me or info, just email info, because I'm on the distribution. I'll see it. with your your circumstances. And then we can kind of give you an idea of of expectation. If you've never done one of these before, that's okay. well.

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CAELI RIDGE: you need to have some history of investing. We we'll talk about that. I don't want to go down that rabbit hole. Just let us know what your scenario is, and we'll we'll get on the phone and and hash it out.

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Karlie Libby: okay, guys, yeah, go. Correct. I'm sorry. I do have one more question. Then we can go ahead and end it. But Jenny asks, is there a reason a Dscr alone would need to go into my personal name instead of my Llc.

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it's going to be about terms. Jenny, so you you can choose if you really, really, really don't want it to be in your personal name. Fine. But you, and getting to expect that the terms are going to be less favorable if we close in the entity name

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CAELI RIDGE: and keep in mind, you're gonna have a personal guarantee on it, anyway. So, looking at those side by side and weighing the options, you may decide that it makes more sense to go ahead and close it in your personal name, close in the entity name or quick claim into the entity name, because at the end of the day, you guys, it shakes out to be the same liability.

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CAELI RIDGE: So if the entity, if the Llc. Let's let's just let's determine what is the need if the need is exclusively asset protection. My advice is to. If you have golden tickets left

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CAELI RIDGE: and you qualify, use the golden ticket.

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CAELI RIDGE: If the Llc. Need is for asset protection only that is your best possible scenario. If it's available to you, and you qualify right. If you have golden tickets left and you qualify.

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CAELI RIDGE: use that

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CAELI RIDGE: transfer it, quit claim or warranty. Some States call it a warranty deed into the Llc. For that asset protection, because the other scenarios

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CAELI RIDGE: that either let you close in the name of the Llc.

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CAELI RIDGE: Right? What whatever whatever combination there there of is at least with us right now, and 99% of the other loans that you're going to find out there will have that personal guarantee. So from a liability standpoint, from that perspective.

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CAELI RIDGE: it's the same. There is no difference. You're personally obligated to that debt, and

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CAELI RIDGE: you've signed a personal guarantee, so that in the event of default, they do legally have the right to come after you. Personally, though I've never seen it happen that way. The non recourse, no personal guarantee is the only way around that.

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CAELI RIDGE: and your terms are going to be far less favorable. Hopefully I answered, your question.

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CAELI RIDGE: Jenny, if I didn't feel free to hit me up an email, if you want

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Karlie Libby: perfect. We have one more from Jamal. Can those loans work to buy and put in boxibles?

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CAELI RIDGE: Jamal? I don't know what boxibles are. Tell me what that means

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Rev. Jamal Tharp: they are tiny homes that are rebuilt. Oh, us government, Federal government, and Elon Musk have bought times, and

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Rev. Jamal Tharp: they're about $50,000. They're nice and as long as you have a slab and all the utilities

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CAELI RIDGE: you breaking up. Just a little bit, Jamal. I'm going to say that it's it's possible. Why don't you email me? And I'll I'll double check with our investor.

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CAELI RIDGE: Okay, great, thank you. Yeah. You bet. Thanks for the question.

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Rev. Jamal Tharp: Thanks.

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CAELI RIDGE: is there another one from Jen? I I'm actually I I opened up our meeting so real quickly, Jeannie, for tax tax reasons. this brings up a good point. No, it shouldn't have. There shouldn't be any difference. And and let's be clear about something, so you'll have a an option to file if you've personally obligated the debt, anyway, which is what you're gonna do like, I said.

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CAELI RIDGE: Now, 50 times,

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CAELI RIDGE: filing it on a business tax return is only going to hurt your chances of going conventional again later, anyway. because the rules conventionally say that if you have filed

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CAELI RIDGE: your residential investment properties on a business return on the Llc. Return. But you personally obligated the debt.

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CAELI RIDGE: You will not get to take any of the gain

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CAELI RIDGE: from whatever that's the scheduling calculation comes out to be. But I will hit you for the loss up to a maximum of the properties. Piti! That's a little convoluted, I would say, ping me on that, Ginny, and I will go over with you. I think it requires some visual aid just to kind of show you what I'm talking about. But

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CAELI RIDGE: there isn't going to be any difference between now, if you're a corporation and you're starting to have K ones, etc. That's another conversation, but if it's just a straight llc. No, there's not going to be any difference in in the taxable benefits that you would receive from one or the other. But there would be a very significant difference in how you would qualify if you do it the way I think you're defining.

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CAELI RIDGE: Okay, team.

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CAELI RIDGE: So I'm gonna try Jesus, I'm gonna try to get my shit together. Excuse me and make sure that next next Tuesday I've got the amortization and the interest only visual aids ready for us to dig into that So say a prayer for me, please.

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CAELI RIDGE: otherwise we'll have some other good content to to share with you. okay, guess what we're on. Stand by. If anybody needs this for anything, you know how to get us Ridge lining group.com Info Ridge, Learning Group a 574 ridge. All of those things. see you soon

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CAELI RIDGE: bye, peeps.