how and where to get loans for more than 4

Question

I have four properties including personnel home. Have ARM'S on my three rentals and a HELOC that I used for down payment on properties. Wanting and ready to buy more, I'll have down payment, how do I get them financed without putting loans in wives name. I know of hard money but isn't that short term.

Mark A Hall · Answer

To George Despotopoulos and Andrew Postell thank you so much for the info. You guys are spot on with my situation and answers I've received from bank.  You've both been great help for me moving forward, I'm a W2 guy with a credit score of better than 760 so that part not a issue. Wife doesn't want involved so thats why I don't use her. My joining this BiggerPockets family is blowing me away at the social media power that is available to real estate investors. Just unbelievable. I love it. I'm 61 so time is not something I have a lot of (I guess). LOL.   Thanks again guys

Andrew Postell · Answer

@Mark A Hall you have plenty of options to get more than 4 mortgages.  I'm going to guess that a bank stated you cannot have more than 4 and that might be the case with that specific bank but there are banks out there that do not have this "overlay".  Overlays are the extra rules that banks put on top of the Fannie Mae/Freddie Mac guidelines.  Fannie/Freddie (if you recognize those names) govern "conventional" loans.  Those are the loan types that have the best rates, terms, etc.  You are limited to 10 conventional loans and that is a conventional loan limit.  However, Fannie/Freddie do allow banks to be more conservative if they want but not less conservative.  So if the conventional minimum credit score is 660 and a bank does not want to go below 700, then that is fine with Fannie/Freddie.  Many national banks have an overlay limit of 4-6 loans but there are plenty of other banks that will allow the max of 10.  You'll just have to call around.  Or you can Private Message me and I can point you to one in Ohio.  Hope this explanation helps!

George Despotopoulos · Answer

Hey Mark, with regards to your wife being put on loans, if you get your loan through Fannie Mae  or Freddie Mac, those loans follow traditional guidelines and the debt  and credit of your non-borrowing spouse isn’t factored into the loan. If you're in a community property state, which Ohio is not, those states where community property  is in effect, a lender requests a credit report from the  non-borrowing spouse when doing an FHA or VA loan. I am not a conventional/traditional lender, so anyone with more experience feel free to chime in or correct if I'm mistaken.

In the non-bank lender sector (let's call them specialty lenders), your wife does not have to be on the note and/or mortgage. Depending on the state where the property you're financing is located, she may need to sign some documents at closing, but she will not be part of underwriting or the security instruments securing the debt on the property.

So, for specialty lenders, you can move forward and buy on solely in your name. You can also create an LLC to evince that this is a business you run.

Hard money is for short term, but there are products, such as bridge loans, which are hard money loans that you can refi within 12 months into a longer term mortgage/note. This are usually for buy/rehab projects that you intend to put higher rents in place. The idea behind taking a hard money loan to refinance it  is that when you buy a rental property a lot of the underwriting is focused on the rental property's income. Your rate is primarily determined by how high your debt-service coverage ratio is (basically measured as net income from the property divided by the loan payment). If you feel like you can get higher rents with some light rehab, you would take a hard money loan, do  the work you need to do, put better leases in place and then apply to refinance. This way your DSCR will go up and your rate for a longer-term will go down. Also, you may build more equity in the property with these improvements and could potentially cash-out a little to put to a new property or to cover business expenses.