Having Multiple Loans in Your Portfolio

[Benjamin Sulka]

Hey BP! 

I'm looking to purchase a multifamily in the summer of 2024 as my first deal and do a house hack. I'd like to take out an FHA loan and live in one side of the property for a years time.

After this, my goal is to purchase 20 rentals within the next 10 years. 

From a lending perspective, what advice do you have for building a portfolio and being able to have many loans at a single time? What issues have you run into and how did you weather them? 

I'm grateful for any advice and I'd love to connect and add value however I can. 

All the best,

Ben Sulka, aspiring real estate investor

[Randall Alan]

Quote from @Benjamin Sulka:

Hey BP! 

I'm looking to purchase a multifamily in the summer of 2024 as my first deal and do a house hack. I'd like to take out an FHA loan and live in one side of the property for a years time.

After this, my goal is to purchase 20 rentals within the next 10 years. 

From a lending perspective, what advice do you have for building a portfolio and being able to have many loans at a single time? What issues have you run into and how did you weather them? 

I'm grateful for any advice and I'd love to connect and add value however I can. 

All the best,

Ben Sulka, aspiring real estate investor

 The basics are that you can have up to 10 Fannie Mae owned loans at any given time.  Most lenders want to sell their loans to Fannie Mae which then get packaged up as securities other investors buy.  

Suggestions - look for properties that have multiple 'doors' (rentable units) on one parcel of land.  I have 2 properties that each have 2 duplexes on them.  This gave me 4 doors for 1 loan.

If you run out of Fannie Mae 'slots', you can switch to commercial financing to continue to build our portfolio.  We used a commercial loan to consolidate 4 Fannie Mae loans (that had higher interest rates) into a lower interest rate commercial loan; but the caveat is that commercial loans usually don't have fixed interest rates for 30 years... usually they reset every 5 years to the current interest rate, and they typically have shorter amortization times... like 20-25 years.

As you build up your loan count, Fannie Mae raises the lending requirements... you get into reserve requirements like, you need 6 months of cash reserves to be able to pay for the mortgages".  I ran into one that said that I had to be listed on the deed for my own house (ie use up one of my slots) even though when my wife and I purchased the house, she was the only one on the deed.

One smart move is to only buy properties in one person's name.  So if you are married, you don't put both you and your wife's name on the loan.  That way you have 10 loans, and she has 10 loans.  

You can also google "Fannie Mae Lending Guidelines" and you can pull the requirements right up... their main process is called desktop underwriting. 

Check their website out here:

https://selling-guide.fanniema... 

Hope it helps!

Randy