Is 10 SFR's the most you can have?

Question

Hi there,

I"m about to reach my 10th loan on SFR's. I'm a big fan of SFR for multiple reasons and have never really wandered into the multiplexes.

I've heard that 10 is the maximum number of loans you can obtain. Is this true? How do people get around this so they can acquire 20, 30, 40 homes?

Thanks.

Spencer

Andrew Postell · Answer

@Spencer Ellingson yes, there are LOTS of ways "around" the 10 loan limit.  You can secure your next property with a "portfolio" or "commercial" type of loan.  That's the loan types that you can close in an LLC type of thing.  You can also secure "blanket" loans.  Those are the loan types that cover multiple properties with one loan.  This may not apply exactly but you are allowed to purchase your primary home past the 10th loan limit.  So if you have 10 mortgages and you buy another primary home, meaning you keep your current home (and rent it out maybe?), then you can get 11 loans.  And you can do that again to get 12 loans and so on.  And if you really wanted to you could take the cash flow on your properties and apply it to your lowest loan amount for a few months to power that down and pay it off to buy your next home.  Lots of ideas and this is only a few of them.

You are now at an expert level of investing.  Very few people make it to your level.  The ones who do have lots of options when it comes to financing.  You really should have MULTIPLE avenues to secure your next property.  I would certainly encourage you to begin interviewing more banks about their "in house" or "portfolio" loan products.  The "10 loan" limit is a Fannie Mae/Freddie Mac limit. Think of them as a bank.  When you have more relationships with other banks, you might tap all of their money too!  It certainly happens with the best investors.  So start exploring other options for yourself now so when you find that next killer deal you can execute it.  Hope this helps!

Spencer Ellingson · Answer

Super helpful! Thank you Andrew for the advice on this! I never really thought of Fannie Mae/Freddie Mac as simply a bank. Sounds like I need to go into my bank and talk about what types of options they have.

Spencer Ellingson · Answer

@Steven Accardo thanks for the information.. I wonder if another way around it is if you bought houses under a business name but with a personal guarantee?

Steven Accardo · Answer

Hi @Spencer Ellingson

Here is the Fannie Mae Guideline in regards to the number of financed properties. You can have a maximum of 10 FINANCED 1-4 unit properties, so you can have more than 10 residential properties, but only a maximum of 10 can be financed.

If you have enough equity in one or more of the properties, then you could do a cash out refinance on one property to pay off the mortgage on the other. Now you have one less financed property, and could finance another. This may not be ideal, but it is one way.

The other way would be to work with a lender who has access to Non-QM products, and whose overlays do not restrict the number of financed properties allowed. These will come with higher rates however.