Financing three rental properties

8 Replies

I have not had a mortgage yet, and don't have any experience with this, but was wondering if it is possible to finance three houses with one mortgage? Say I want to buy three houses at 33k each, could I get a single 99k loan from a bank to cover the purchase? Would an FHA loan or traditional mortgage work that way, or would I need to get a portfolio loan or other creative financing?

I tried to do the same thing and the only option to do that with a mortgage is if one of the houses is worth the amount you are looking for. Otherwise you have to take out a mortgage on each property separately. The cheaper way I was able to work around that was to get a HELOC out on my primary residence, the rate was lower than a mortgage and the bank i went with only required payment to cover the interest. Ex $80,000 HELOC @ 2.89% minimum payment would be $192.66/mon for 10yrs and after you will have 20yrs to pay the remaining balance. That helps in case you are in a situation where you have no tenants or some other fiscal emergency. Otherwise you can pay as much as you want towards it. In that sense you can keep doing the shuffle and take out a HELOC against your rentals and go around and around and around ;). Get the cash flow rolling before you go buck crazy though. Speaking from Ohio here.

Originally posted by @Mike Evatz:

I tried to do the same thing and the only option to do that with a mortgage is if one of the houses is worth the amount you are looking for. Otherwise you have to take out a mortgage on each property separately. The cheaper way I was able to work around that was to get a HELOC out on my primary residence, the rate was lower than a mortgage and the bank i went with only required payment to cover the interest. Ex $80,000 HELOC @ 2.89% minimum payment would be $192.66/mon for 10yrs and after you will have 20yrs to pay the remaining balance. That helps in case you are in a situation where you have no tenants or some other fiscal emergency. Otherwise you can pay as much as you want towards it. In that sense you can keep doing the shuffle and take out a HELOC against your rentals and go around and around and around ;). Get the cash flow rolling before you go buck crazy though. Speaking from Ohio here.

Thanks for the info Mike... Thats what I was afraid of. I guess I was looking for a way to get around the fact that three separate loans would each raise my DTI ratio making it harder to get one after the other. Since I don't have a primary residence to refinance, it sounds like I will just have to wait for some time after each loan for the rental income to count towards my monthly income. Or is there another way to do it? How long will it take for banks to accept rental income as valid? Ive heard conflicting information about this.

what you're talking about is a blanket mortgage. Although not common with institutional lenders and single family houses, there are a few banks that get it and see the opportunity. We have a local credit union that has a special loan program for landlord investors. They do a blanket mortgage encumbering all the properties and have a few restrictions. If conventional lending is your only source, and I assure you it is not, ask around at the smaller, local banks. A place like Wells Fargo or Chase isn't interested in this type of loan product.

@Scott Campbell

Fannie Mae will allow you to use 75% of the projected rental income on the property your buying, even without a history of rental income on your taxes. The appraiser will do a Rent Schedule form that says what they think the average rent in the area is. This should help your DTI problem

Originally posted by @Joe Impagliazzo:

Scott Campbell

Fannie Mae will allow you to use 75% of the projected rental income on the property your buying, even without a history of rental income on your taxes. The appraiser will do a Rent Schedule form that says what they think the average rent in the area is. This should help your DTI problem

 So say I'm applying for a loan on a rental property. If I tell the bank that I intend to rent it out, they will count 75% of the rent towards my monthly income for that loan? That sounds like a great deal. Do you know where I can find more information about which loans that works with? Is it only with Fannie Mae loans? What are Fannie Mae loans (I thought most loans ecentually are sold to Fannie Mae) and where can I apply for one? Thanks a lot! That was really helpful...

@Scott Campbell  

yes Fannie Mae is the only loan program that will do it on an investment property.  When your applying for a loan if it is within 100 miles of your primary residence (if you own your home) then it would automatically be considered an investment home, and won't be classified as a 2nd home unless it's in a vacation spot or something like that.  Since it's being classified as investment you can use the rent even without it being rented out or a signed lease.

Also, Fannie Mae is just a specific type of loan program. There is also Freddie Mac, FHA, VA, USDA, and then lenders that just write there own guidelines but the loan is not government insured so rates are usually higher. Each program has it's own little quirks on things.

If you want to apply for one you can call or email me at the info below, or PM

Joe

Originally posted by @Joe Impagliazzo:

@Scott Campbell 

yes Fannie Mae is the only loan program that will do it on an investment property.  When your applying for a loan if it is within 100 miles of your primary residence (if you own your home) then it would automatically be considered an investment home, and won't be classified as a 2nd home unless it's in a vacation spot or something like that.  Since it's being classified as investment you can use the rent even without it being rented out or a signed lease.

Also, Fannie Mae is just a specific type of loan program. There is also Freddie Mac, FHA, VA, USDA, and then lenders that just write there own guidelines but the loan is not government insured so rates are usually higher. Each program has it's own little quirks on things.

If you want to apply for one you can call or email me at the info below, or PM

Joe

I will PM you... 

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