Hi everyone and thanks for all the help online in previous posts.
My husband and I are both reaching our 10 Fannie Mae Loan limits and will likely be out of these "golden ticket" loans by the end of the year. I was wondering what other options that I had to continue purchasing properties. I've heard about blanket, portfolio and other types of loans but I've really don't know what my next step is.
Does debt get prohibitively expensive now? Is the game over for a small fish? Where should I look?
Lots of options. Keep your FICO high, show net income, start depositing everything into one account and you can get 20 more decent rate loans
I am in similar boat as Julie, can you please elaborate further on "Lots of options", I already check all the boxes of High Fico, showing net income....what type of lender should I be searching for?
I've been using an online hard money lender now. Closing costs and interst rates are a bit higher buy you can make it work. Last loan I got I got a 5.25 interst rate. I will say they did charge me a high interest rate on the first loan I got with them. They said the more I work with them the better rates I get and so far it seems to be true. Hit me up if you want more info!
If you already have 10 loans each for a total of 20. I would use a 1031 exchange to trade my 2-4 cheapest properties each in to more expensive properties. I’ve seen way too many people use up their 20 loans on a bunch of $100-$150k properties.
If you live in a very rural or rundown area and can't find more expensive properties, you don't want to invest in more expensive areas, or your 20 properties are already $300k+ properties you should be able to do a couple of cash out refis. Even if you only extracted 10% LTV on each that woudl give you enough cash to buy 2 more properties.
Beyond that you are USUALLY allowed an 11th loan as a primary residence. And many local credit unions that specialize in lending rather than saving might be able to help you. I never had more than 12 mortgages but the last 2 came from a local credit union even though I had been “unemployed” for at least 5 years.
Welcome to the world of DSCR lending.
There's an entire tier of lending that is easier to close, close in rate, higher in fees, but significantly lighter in terms of paperwork required for qualification and it's DSCR or debt service coverage ratio lending.
- No income verification required
- You can close in an LLC that you've had or just created
- Some lenders allow cross collateralization of properties
- Rates go as low as 3.99% on a 30 year fixed
- You qualify on your middle credit score and whether the property performs at a ratio above 1.0 (sometimes lower)
- Max LTV's are 80% on purchases and 75% for cash out
- Seasoning for decent rates and terms is 6 months from the purchase date
- No restrictions on the number of properties financed
Here's a real comparison to a Fannie/Freddie loan (after the lender letter from April that restricted lenders to originate only 7% of their portfolio in investment properties), 150K cash out investor loan at 75% ltv that was 3.375% with .75 discount on a 30 year fixed in March; priced out at 4.875% and a cost of 1.75 discount points. That same loan with a DSCR lender was 4.75% costing 2 origination at 75% ltv.
DSCR is real. Find a good DSCR broker and have a conversation. You'll be glad you did.