LESSON 4

Recourse: What You're Really Risking

Recourse Loan

If the property fails, the lender can come after your personal assets. Savings, other properties, car, wages. Everything.

Non-Recourse Loan

Recovery limited to the property. If the deal goes bad, you hand back the keys and walk away. Painful, but survivable.

The Catch: "Bad Boy Carve-Outs"

True non-recourse is rare for smaller investors. Watch for exceptions that convert non-recourse to full recourse: fraud, misrepresentation, environmental contamination, bankruptcy filing.

The practical difference is enormous. Full recourse on a failed deal can mean personal bankruptcy. Non-recourse means a contained loss.