Problems getting loans on more than 5 properties?

Question

I have heard that, as of August 15, Fannie Mae and Freddy Mac have limited an individual to 5 mortgaged properties.  I already have more than that many and am becoming liquid again and ready to buy in this down market.  Has anyone found a way to deal with this?  If I don't figure this out, my business model of buy and rent back preforeclosures is shot.  Any ideas?

Kevin Mace · Answer

there are plenty of banks that will lend to more than 4 properties.  Let me know if your local bank does not have a program for you.

Lynn Payne · Answer

Much of my net worth is not liquid.  I don't mind buying with cash to get the deal done and putting a lien on it later to keep what I do have liquid liquid.
            
            Thanks for the recommendations on using an LLC and a local bank.  I have an LLC and a great relationship with a local bank and will arrange a meeting with them to discuss.  
            
            So far my bank has had me personally sign/guarantee everything and refinance out with the big banks.  This may have been my idea or theirs, I don't remember.  But I will tell them that this will no longer work for me and hope to work things out.

Thanks again, other input is always welcome, Lynn

Frank Adams · Answer

With that kind of net worth why are you borrowing money? Cash is the way to go.

frank

Christian Malesic · Answer

I can not emphasize Mikeâ€™s recommendation enough.  You must incorporate or LLC ASAP!!!

There are many threads on BiggerPockets on this topic.  If nothing else, go back and read some of them.  We were just a little larger than you currently are in properties, smaller in net worth, when my attorney made a special appointment with me (BACKWARDS since I am usually the one making appointment).  His advice: stop digging this hole!

I thought I was doing great â€“ building a mound even (to continue with his analogy).  He was speaking from a liability protection standpoint.

Michael Rossi · Answer

If you're going to be in business, then I would start a LLC for a variety of reasons (asset protection being a big reason).  I buy all my properties through LLCs and therefore get commercial loans.  There is no limit to the number of commercial loans you have.  With a net worth of 2 million, great credit, and good cash reserves, you shouldn't have any problem at all.

Good Luck,

Mike

Michael Shadow · Answer

I too like going with commercial loans in a LLC.  They keep your credit score up and there is no limit to how many you can get.

-Michael

Christian Malesic · Answer

Now back to our regularly schedule program:

Commercial loans are the way to go.  I, too, have had much luck dealing with the large, local banks.  Meaning, they are big in my area, but not on the national scene.  They are hungry, but much more conservative.  I have found it harder to do cash out mortgages (to use money for rehab), though I have made it happen.  Let us face it, the bad businessmen have made it hard for the good businessmen to do business.  The rules are tighter these days.

C. Burris · Answer

Are you buying through a business?

Lynn Payne · Answer

PS, net worth 2 million, good cash reserves, great credit, and can go full doc.  Am I going to have a problem???

Richard Warren · Answer

Actually the limits have been reduced to 4 loans.  Not all banks sell their loans to Fannie & Freddie.  You should look to smaller local banks and you will find one.  A good mortgage broker should be able to help as well.  A lot of people make a big deal about the reduction from 10 to 4 loans, but thatâ€™s they way it used to be for years.

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