10 institutional loans and private lenders

4 Replies

Hello all, I am trying to buy 10 investment properties with 10 conventional loans.  I want to take advantage of the low interest rate and 30 year terms.  I have 4 properties now and 6 to go.  It is taking about 4-5 months to buy, close, rehab, get my money out and do it again.  I would love to be able to buy properties faster so I thought about exploring some private lending.  If I do some deals with private lending will that hurt my debt to income ratio thus hurting my ability to qualify for conventional loans?  And also if you have to get a private investor loan at a higher inters rate, is there a way to "refinance" it later to a lower rate if you already have 10 conventional loans?

To buy properties faster - look at buying with Hard or Private Money - fix refi - using the rent from the subject property, you should be able to do a couple at a time depending on DTI. I was able to buy 8 properties with this strategy, in about 2 years.

When you get over 10 properties - you can do it all the same, but you will need to refi with a local bank or commercial lender - like B2R. Often lower loan to value, higher rate, shorter term. But when you have 10 cash flowing properties, with equity it shouldn't be an issue continuing buying and/or refinancing new properties.

@Travis Sperr

Thanks Travis, when you refi with conventional mortgages do you have to put the 20-25% down if the LTV is only 70-75% It would be nice to borrow the money for the purchase with private/hard money, use my own money to fix it up thus increasing the value, and refi with out having to come out of pocket more for the down payment.

Know who you are going to before you try to refi as some lenders will only lend on what you paid for the first year, not the adjusted value.

When it comes to conventional financing (I'm referring to FNMA/FreddieMac, some institutions that retain the loan many have different rules) a few things you will run into, you can have as many financed properties and be able to refi your primary residence, but, when it comes to refinancing investment properties, if you have more than 10 financed properties, FNMA/Freddie will not purchase the loan and therefore you will be turned down, if you have fewer than 10 financed properties, some lenders may limit their exposure and limit the number of properties they will refinance for you and you may have to do some loans with one lender and some with another.

There are some lenders lenders that will refinance your property even if you have over 10 financed properties, the only downside is that these loans will typically be at a higher rate than the conventional financing. 

Also with conventional financing, the lender will determine the value during the first year of ownership under most circumstances as the lower of the purchase price or the appraised value, whichever is LOWER when it comes to cash out loans, they do have a delayed financing rule if you paid cash for the house and want to pull it out during the first 6 months but you will still only get to 75% LTV for an investment property based on purchase price.

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