Are mortgages 5-10 substantialy harder than 1-4?

4 Replies

I have two properties now and I am planning to ramp up to about eight over the next three years. I was planning to have about 70% equity, 30% loan on each. I've recently read that after your fourth mortgage it is much more difficult to refinance. If this is the case, I'd rather pull more equity out of the first four. Does anyone have any experience trying to get loans 5 through 10?

30% loan to value will be super easy as long as the loans are over $50k. 

If you meant the opposite of what you said, 70% loan to equity that should still be no problem. Usually they will lend 75%. I encountered rates about .25-.5% higher because of “overlays” 

Originally posted by @Steve Emling :

I have two properties now and I am planning to ramp up to about eight over the next three years. I was planning to have about 70% equity, 30% loan on each. I've recently read that after your fourth mortgage it is much more difficult to refinance. If this is the case, I'd rather pull more equity out of the first four. Does anyone have any experience trying to get loans 5 through 10?

 Reserve requirements are what start to get you.

In all cases, FNMA wants 6 months of PITI on the subject property. In addition, she wants the below amounts of unpaid principal balances in reserves.

1-4 financed properties: 2%

5-6: 4%

7-10: 6%

So if you have $2,000,000 in investment property mortgage debt other than the subject property, that works out to $120,000. Most REI don't want to have $120k sitting around doing nothing but checking underwriting boxes... my suggestion would be that "when life gives you lemons, make lemonade." Diversify into assets other than rental properties.... nothing wrong with a little diversity in your portfolio.

@Bill Brandt good to know, thanks! I mostly want to under leverage because I want strong cash flow from each property but good to know it will help with the additional mortgages too

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