When will the banks say no because of how much house debt I have

[Ari Dandridge]

My business partners and I are wanting to do the BRRRR strategy but we have a concern that comes into play more long term.

let's say we buy a property refinance it and do a HELOC on that money we get from the refinance. We then use that money on another property. And then we try and repeat the process. At what point are the banks going to say "no you have too much debt in houses"

Is this a valid concern?

[Chase C Henderson]

Ari, 

So there is no limit to the amount of debt technically speaking. 

That being said there are some things with banks and loan programs to look at.

Most banks have a lending limit not in number of loans but amount borrowed on investment/commercial lending. 

That being said I have heard of a limit around 10 loans, but I have never ran into this issue.

Bigger banks have larger limits, but can be harder to get in the door, if at all. Small banks have smaller limits, but are generally more understanding of getting started. 

The example of this is we have a local bank here in cincinnati that we have 6 loans with, they have told us on many occasions they will right as many loans that underwrite and stay under there 1.25 million lending limit. 

However we have a loan on one of our larger projects that is upwards of 2 million and serviced by a larger regional bank in kentucky. 

if you are looking to take advantage of FHA or Hud or USDA loans be aware they generally only allow you to have one or two of these loans at a time.

Another program to look into is DSCR loans are a great tool to look into and ones that we use on all our investments. Long as you have some basic solid credit, the banks will only judge the property, and not you.

Hope this helps