5 year plan, 4 conventional loan max

10 Replies

I am building my 5, 10, 15 and 20 year plan and I am going to have more than 4 mortgages in the next 5 years. From the information that I gathered on the podcasts, I know the rule with fannie and freddie about having only 4 conventional loans per person. Once I reach my 4 loan max what can I do? Is my only option commercial and private investors? I know this seems like a basic question but it is just a roadblock that I have right now and I would really appreciate some guidance!

By the time you reach your loan limit you should have some equity in the first 2 properties to use either by getting a HELOC or doing a 1031 exchange.

You might want to take a look at this small book that @Brandon Turner wrote.

http://www.biggerpockets.com/files/user/brandonatbp/file/7-years-to-7-figure-wealth

It uses 1031 exchanges pretty much all the way through.

503-871-2961

Fannie Mae allows up to ten financed properties, though some lenders may have their own overlays that limit that number further (i.e. like 4).  Portfolio lenders also will often go up to ten.  Beyond ten, investors often have to start looking more at commercial loan type products. 

@Andrea Thurau

I know my lender does 10 mortgages now, but when I started investing a few years ago, the limit was 4.

I wouldn't worry too much about the number of mortgages you can obtain, as the rules may change. Just get started!

Yes, ask around- I was told 4 mortgages too but it depends on the underwriter- if they use Fannie and not Freddie you can get up to 10!  For the first 4 you will have to put 20% down (25% for multifamily) and then 5% more after that for 5-10.

Also, if you happen to be married, only put one name on each property and you can double the number of loans.  We had our house in my husband's name and the first 3 rentals in his name as well- he works, I don't.  Now I am able to put the next ones in my name with the income off the rental properties, so we are buying #4 and #5 with 25% down (they are multifamily) since they are my first two mortgages.  If they were in his name we'd be on mortgage #5 in his name and have to kick in the extra 5%.

Kelly

Oh this is perfect! Thank you everyone! I have one more follow up question for all of you and I again am so grateful for the help.

Who should I start building a relationship with? Are credit unions a better avenue for more lending? I have had a long time account with PNC but since they are such a corporate bank would they be more conservative with the number of mortgages?

@Kelly N.

 thank you for the specifics on fannie v freddie. I will research more on that topic. 

Originally posted by @James B. :

@Andrea Thurau

I know my lender does 10 mortgages now, but when I started investing a few years ago, the limit was 4.

I wouldn't worry too much about the number of mortgages you can obtain, as the rules may change. Just get started!

 Thank you so much for the encouragement James!

Originally posted by @Austin Youmans :

By the time you reach your loan limit you should have some equity in the first 2 properties to use either by getting a HELOC or doing a 1031 exchange.

You might want to take a look at this small book that @Brandon Turner wrote.

http://www.biggerpockets.com/files/user/brandonatbp/file/7-years-to-7-figure-wealth

It uses 1031 exchanges pretty much all the way through.

 Yes! That book sounds exactly like what I want to do! Perfect suggestion!

Andrea- try MB Financial.  You may find one fairly local to you or you can talk to @Jerry Padilla , we are currently waiting to close on two loans through him.

Andrea Thurau I was locked up when i hit loan # 4. I went to portfolio lenders and was able to accumulate +12 more loans. The key to that was sales and determination. When someone says no you push through and keep searching. Frank
Frank Romine, Real Estate Agent in CA (#01957844)

While conventional does have some advantages, mainly fixed for 30 years, I prefer commercial/portfolio loans.  You can get to the point in your relationship with a bank, that an email or a phone call is all you need to do the next deal.  Don't fear moving to the next level.

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