Rental Property Investor · Dayton, TX · Member since 2020 · 14 posts · 6 votes
So I’m trying to understand then lending side of real estate. How many loans can you have under your name? Obviously investors with multiple properties have multiple mortgage loans. Do banks consider your cash flow as an income considering your debt-to-income ratio? Will they consider the prospective cash flow on the property your applying to finance as part of their decision?
Rental Property Investor · Minneapolis, MN · Member since 2020 · 540 posts · 285 votes
6y
@Hunter Wilburn
The answer is 4 conventional mortgages. I agree with @Jody Sperling don’t say “oh only 4 how can I get enough cash flow for this to work”, take it 1 house at a time. By the time you get to 4 you can refi all 4 into a commercial loan then reset your conventional to 0 and start over. Checkout the InvestFourMore guy on Insta, he also was a guest in a BP Podcast. His FourMore is exactly what tim talking about.
Omaha, NE · Member since 2020 · 611 posts · 665 votes
6y
Go out and get your first (or next) rental house. Worry about how many loans the bank will give you when they tell you they won't give you any more loans because you have too many.
If you find a portfolio lender, you'll never have that problem. They'll continue to lend to you so long as you're a good partner and a reasonable risk.
Rental income isn't counted until it has been established for two years. I've always found this to be the case. Best of luck! Don't be afraid to make mistakes. Pull the trigger on that first (or next) property.
Rental Property Investor · Minneapolis, MN · Member since 2020 · 540 posts · 285 votes
6y
@Hunter Wilburn
The answer is 4 conventional mortgages. I agree with @Jody Sperling don’t say “oh only 4 how can I get enough cash flow for this to work”, take it 1 house at a time. By the time you get to 4 you can refi all 4 into a commercial loan then reset your conventional to 0 and start over. Checkout the InvestFourMore guy on Insta, he also was a guest in a BP Podcast. His FourMore is exactly what tim talking about.
Rental Property Investor · Dayton, TX · Member since 2020 · 14 posts · 6 votes
6y
@Frank Hinck
Thank you for your help. I’ve known about refinancing but now I know that I can consolidate four into one commercial. I will definitely get on Instagram and look him up.
Regarding the rent as income, my personal experience is they want to see the property rental mortgage for at least a year. From past personal experience they have told me "don't show me the numbers, your added rent income is 80% of the total mortgage of the property". I'm sure there are other ways to show the income from the rental property.
Developer · New York City & L.I. · Member since 2013 · 79 posts · 29 votes
6y
4 conventional for sure. After 4, depending on your DTI, you can secure 10 (including your primary home) for conventional financing. After 10, portfolio and private banks
Rental Property Investor · San Antonio, TX · Member since 2011 · 512 posts · 290 votes
6y
@Hunter Wilburn ten for you and ten for your wife If she can qualify independently (Or possibly nine and nine if you share your primary). I was told otherwise and it is now an issue. We were both on loans we should have done in one name only. I disagree with the advice to just go get a deal And then worry about it. You are smart to ask. This could determine whose name you put the loans in to preserve maximum lendability (I may have made that word up). I’ve got a referral for a lender in Texas that has helped me a lot when others told me there was a max of four or ten. PM me if you need one.
Conventional loans are gold. Use them wisely and with some strategy is my advice. Keep in mind lending rules can and do change often. Many times I’ve been told “no” several times before getting a “yes” to a question like this.
After these are maxed out, portfolio and commercial loans will continue but terms aren’t as sweet. Best of luck!
yes correct that is precisely what I/We did, spread it out between my wife and I. Have portfolio loans terms def not as good, but not the end of the world. LOVE seller financing and have several hard to get in my neck of the woods
Lender · United States · Member since 2020 · 1k+ posts · 499 votes
6y
You can have a maximum of 10 conventional loans on your credit. Many investors go to private companies for mortgages because they typically don't report on credit, which enables them to grow their portfolio easier because their credit is not brought down from mortgages. I see investors with 15 properties and none show on credit.
The disparity in answers on this thread is astounding.
Here's the truth.
You should absolutely do research BEFORE you get started. It's important to structure your financing. Here's why.
You and your wife go to buy a property and you could have qualified on your own AND SHE COULD HAVE QUALIFIED ON HER OWN. You just burned one of her properties (or vice versa) that could have been financed down the road; robbing you both of income.
The rule is 10 financed properties EACH for conventional financing. The rules on LTV change after 4, but you can each have up to 10. That doesn't mean you can only own 10 properties each, but they can't be financed meaning you can own a bunch of properties free and clear and they don't count in the equation.
Refinancing properties from personally owning them to a corporation down the road will free up more conventional financing if you don't personally guarantee the loans.
Hope that clarifies. Some lenders have overlays and their loan originators think those are the be all to end all guidelines when they're not.
Broker · Phoenix, AZ · Member since 2015 · 151 posts · 55 votes
6y
It really depends on your DTI and the lenders stomach for risk. Big banks will cut you off at around 3-4 loans, smaller banks can stretch you out to the 10 loan limit, if your DTI stays within their risk parameters. But at one point after the crash, I couldn't even get a 2nd conventional loan even though I had a long track record of investing. It really all depends on your financial portfolio, income/debt scenario, and that banks investment parameters.
If you have a bank that's willing to work with you, keep using that bank until they tell you no. Then it's time to shop around. Smaller banks and local banks will have lower limits, and when you can't get even those banks to lend to you, it's time to turn to creative financing or portfolio loans.