Is there harm in multiple loans if they are for cashflowing prop?

8 Replies

My wife and I are relatively new to the investing game. We have no debt except the 2 houses we own ($240,000 total mortgage debt). One property cashflows $550 / mo and the other is our primary residence / airbnb and cashflows about $400 /mo.  Our goal over the next couple years is to have 10+ more doors.

My question: How many loans can we possibly get?

What are banks looking at?  We make a fair amount of money (about $80k after taxes/expenses), but in my opinion not enough to justify potentially being $1,500,000 in debt in the next couple years.

So, as we venture into the world of rental properties more and more, can we expect to just be approved for a loan every time as long as the property will cashflow?  Or is there a line where they say, "stop, that's too much debt compared to your income."

Lenders and others, what say ye?  Tell me the smartest and most effective way to get OPM!

@Cameron Philgreen   All depends on lenders and their requirements.  When I started off I had good W2 income and good credit, and bought 5 places in a row for about $1.2M in mortgage debt before they started saying no.  Then I sold some stuff, used owner financing for a few deals, and eventually worked with portfolio lenders (small local banks that hold the loan in house and have their own guidelines).

Depends a lot of cash reserves too, in addition to good credit and income.

- Tom

@Cameron Philgreen some variables have to be addressed as presented, like property purchase price and things. Fannie Mae limit is 10 financed properties. There are debt to income limits for FHA and conventional loans. Investment will be a conventional loan. You cannot have Mortgage insurance on a rental. There will be reserve funds requirements, typically 6-12 months depending....for principal, taxes and insurance depending on loan type, credit score etc. property taxes, insurance amounts will come into play in cash flow and debt to income(DTI) ratios. What state are you/properties in? The airbnb income would need to be for 2 years to use. Other properties rent could be used by providing copy of lease agreement. Tax returns for 2 years, and can use depreciation in income calculations among other things. As far as "guaranteed to be approved" can't definitively answer that. It would be an apply, pre-qualify, conditional approval. It's possible. Hopefully helps on your quest for answers. Happy to help. Best -G

@Tom S. thanks so much man!  Super helpful.  


As I'm reading and learning, I keep thinking, 'so why not just buy like 40 properties all in a row, rack up $3M in debt and cashflow like $20,000 per month, ya know?  But obviously banks wouldn't be crazy about that idea, haha.  Sounds like it just takes time.

@George Clark  thanks so much man! Super helpful.


As I'm reading and learning, I keep thinking, 'so why not just buy like 40 properties all in a row, rack up $3M in debt and cashflow like $20,000 per month, ya know? But obviously banks wouldn't be crazy about that idea, haha. Sounds like it just takes time.

Originally posted by @Cameron Philgreen :

@Tom S. thanks so much man!  Super helpful.  


As I'm reading and learning, I keep thinking, 'so why not just buy like 40 properties all in a row, rack up $3M in debt and cashflow like $20,000 per month, ya know?  But obviously banks wouldn't be crazy about that idea, haha.  Sounds like it just takes time.

That is exactly what a lot of investors are doing. We never stop buying. 

Where there's a will there's a way.  Just because one bank says no doesn't mean another one won't work with you.  Keep trying.  It's not uncommon to hear a no from 4 or more places before you get that yes. Portfolio lenders at some of the smaller banks could be a viable option for you.

There is no reason you can't buy a property every year or two provided they meet your requirements for cash flow, etc.  

The Brrrr method is a good way to keep that house train moving along.