Benefits of a Recourse Loan

[Devlin Harding]

Are there any benefits of Recourse Loans? Or are non-Recourse loans always a better decision? Specifically for large apartment building purchases.

[Charlie Fitzgerald]

I think recourse loans make you a better borrower and make you really analyze your acquisition prospects more carefully when buying and your financial structure/need for debt when refinancing.  I am not bothered by the recourse ability of a lender personally and have obtained many loans personally over the years with recourse provisions and personal guarantee requirements.  As a lender, I am always curious when potential borrowers ask about personal guarantees being necessary and/or whether the loan is a recourse loan or non-recourse loan.  With the exception of some limited entity borrowers whose structure requires the loan to be non-recourse.  The rest of the borrowers are in essence asking me, "if I don't pay you as agreed, am I personally okay?"