Investor · Marietta, GA · Member since 2017 · 12 posts · 3 votes
Good afternoon BP family-
This is my first post out here as I have run into a snag. I am currently in the process of refinancing two duplexes and my current portfolio is holding me back due to structure. I purchased a portfolio of 10 units 5 parcels in 2017, a portfolio of 8 SFH in 2018, and acquired two duplexes early on. My entire portfolio equates to 4 mortgages plus my personal home. The underwriter is stating that even though there is one mortgage attached to 5 parcels or 8 parcels, it is still looked at as all properties being financed and it exceeds the 10 property financing rule. Has anyone run into this and were they able to overcome the rule? I appreciate everyone taking the time out to read this post.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
7y
The Fannie 10 limit rule is 10 financed Properties, not 10 Loans. 5 different properties with one blanket mtg counts the same as the 5 properties with 2 loans each. It’s time for portfolio or commercial loans.
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
7y
The Fannie 10 limit rule is 10 financed Properties, not 10 Loans. 5 different properties with one blanket mtg counts the same as the 5 properties with 2 loans each. It’s time for portfolio or commercial loans.
Investor · Marietta, GA · Member since 2017 · 12 posts · 3 votes
7y
The loan loan on the 5 parcel is commercial. The 8 SFH is a standard mortgage. The duplexes are each on a standard mortgage. So how exactly does a portfolio loan work?
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
7y
@Marc Mahadeo lots to this so I'll try to take it one point at a time here:
Refinancing Two Duplexes - Part of your answer is dependant on what type of a loan you are receiving on your Two Duplexes. So if you are receiving a Fannie Mae or Freddie Mac loan (if you recognize those names) then THAT'S the loan types that have the "10 loan limit". And if you have a commercial loan (which is sounds like you do) and if that loan you did not sign for (meaning you are not personally liable...because it's in your company name) then that loan DOES NOT count against you at all.
However, if you are receiving a commercial/portfolio style loan (meaning the money comes from the bank) then maybe the lender just has that rule on their loans.
My Current Underwriter - So who's your loan officer? Your loan officer should know what the company tolerances are and should be able to advise you BEFORE something like this happens. Please keep in mind that investors try to work with smaller lenders because they are more flexible. Large, publicly traded banks are just out. Too many restrictions. Smaller banks should be more flexible. And if they aren't...then go to another lender! No exaggeration, there are 15,000 in the US. You have lots of options. Also, the Georgia forum here on Bigger Pockets is a great resource to ask other local Georgians who they use for lending.
When you are interviewing your potential lenders I would highly recommend asking these questions to test to see if they are flexible:
Questions for Lenders
When do you start using rental income to help me qualify? (the answer needs to be immediately)
How long do you need me to be on title to refinance? (this is important if you do need a short term loan to purchase then refinance out - and the answer should be 1 day...very important that it is 1 day on title is all that is needed to refinance)
What is my minimum down payment required? (if they only require 15% down on a single family home that is usually a good sign that you are working with a flexible lender)
Can I change title to my LLC?
Do you sell your mortgages?
What is your loan minimum?
Can you explain to me what your reserve requirements are?
In this same line of thought you should ALWAYS have multiple lenders. Just sometimes a property, that will make you tons of money, may not fit one lenders parameters. So you need a 2nd, 3rd, and even 4th lender as well.