Conventional Financing Question

[James Wheelock]

I am wondering how many mortgages a person is allowed. When it boils down in real estate, I know leverage is key especially with rental properties. But I have heard that banks will only lend a certain number of mortgages before cutting you off. My question is how does one attain wealth and acquire many properties if this is so? Are many investors forced into creative financing strategies?

[Bill Gulley]

Some of these threads about how many loans can I get are rather funny. No one can tell you! Yes, there are loan concentrations a bank has but it's not necessarily the number of notes you signed, it's the amount of loan concentrations to one borrower. Secondary market has a number of notes, as mentioned, that's because the Secondary really isn't for commercial activities and concentrations are not to a dollar limit but more to the commercial nature at a point.

How many notes you might have is more to your capital, assets, management, equity and liabilities (CAMEL) this is a rating system used by regulators to gauge a banks performance, it applies at a smaller level to each borrower in a commercial aspect.

Old saying, if you can show you don't need a loan, you can probably get one!

I suggest small investors and the newbies concentrate on getting their first loan instead of trying to map out the future. Cross the bridge when you get to it. Chances `are,  your lending picture will be different. As to Secondary types, you can count on up to 10 right now, that changes, you might get your 5th loan and they may cut you off, remember the CAMEL aspects too.

You also need to have more than one lender, a lender can change their portfolio, lending guidelines can change or regulators can cause them to change. There is more to selecting the right lender than them just saying "yes"! I used 4 regional/national lenders, it keeps you from hitting loan concentrations with just one lender.

Just worry about getting your first loan, then the second and so on.

BTW, using private money or creative transactions still effects your CAMEL ride, you can't hide the financials or if you do it's fraud. :)