Maxium number of properties (RMF)?

Question

Hello,

Tried a search, please forgive me if this has come up before.

Running the numbers for my 10 year plan...  At a rate of 20% down on each ($50k or less MF properties), reinvesting every cash flow dollar earned, 4 years of hard saving to accelerate the start-up phase, I could achieve 245 MF properties.  Surprisingly very doable mathematically speaking.  Except...

Then it dawned on me...  I have come across mentions of lender limits on the number of properties you can carry.  Using conventional 30 yr fixed mortgages.

Is there a hard number limit?  Can you max out one lender, go to another and build again?  Or is this why investors eventually move into commercial (apts) as in Brandon's examples?  Is there anyway around this, short of paying out 100%?

Thank you in advance for your time and sharing.

Sincerely,

Michael Spindler (KCMO)

Dawn Anastasi · Answer

Michael Spindler if you get private loans then you don't need to worry about the bank's requirements.  You can start off getting your own 4 loans then get the 5-10 that are harder, then work your way to private money.

Michael Spindler · Answer

Hello David,

Thank you very much for the information.  Printing this to a pdf for a road map.

Michael Spindler · Answer

Hi David,

I meant 245 properties at 20% down only on each, about 13k-16k.  Which can be done through pyramiding.  But this is all for not at this point.

And obviously, I have much to learn.

David Krulac · Answer

Michael Spindler

1.  Fannie & Freddie limit is 10 per person.  You and spouse could get 20.

2.  Many banks have what they call an "overlay", where they apply stricter standards than Fannie & Freddie.  Some are 4, some are 4 +1, etc.

3.  The above only applies to "conforming" residential mortgages to be sold on the secondary market to people like Fannie & Freddie.

4.  Banks and other lending institutions can do "portfolio" lending of mortgages not meant to be sold on the secondary.  For those mortgages, they set their own rules and keep the mortgage internal to the bank for their own investment.  generally that means higher rates, maybe shorter terms.

5. All of the above are residential mortgages.  you can always apply for a "commercial" mortgage.  This can be for a commercial property, but can also be for a small apartment building, or even single family investment properties.

6.  There is also the possibility of a "blanket" mortgage where one mortgage is collateralized by multiple properties.  These don't have to be adjoining properties but can be any properties that the lender will accept as collateral.  There is no limit to the number of properties that can be covered by a single blanket.

7.  Hard money lenders, always an option.  they don't care how many mortgages you have only that the property offered up has sufficient equity.  Their interest rates are high maybe like 12% with 5 points or higher.  So the cost of that borrowing is a consideration.

8.  Private lenders are always available, starting with people that love you, spouse, parents, relatives, and working out in your circle of friends.  High income individuals and IRAs are sources of funds particularly when banks are paying sub 1% interest.

9.  When you exhaust 1 thru 8 above you should have 100 mortgages by then, probably start lending yourself.

David J. · Answer

Michael Spindler.

Are you really talking about $2.45mm in down payments over the next 10 years?  ($50k x 245 x 20% down)

"Surprisingly very doable mathematically speaking."

I would consider a larger investment class if you think you will have that amount of money to deploy.

Michael Spindler · Answer

Hi Elizabeth and Dawn,

Thank you.  Sometimes it is too easy for me to get distracted by the hurdles down the road.  Per your advice, I will focus on the first 4 and worry about the rest later.  : )

Thank you.

Elizabeth Colegrove · Answer

I personally found after 4 very hard. If you can get past the 4 house rule. Most banks require you to have 2 years of experience OR you carry ALL the house dedt on your income structure without counting the rent income. We have only found one located in one state. That has been willing to just view reserves. The new rules make it hard for you to heavily leverage yourself if you are just starting out.

Michael Spindler · Answer

Hi Mehran,

I will look into that right now.  I feel the tears drying up.  Thank you.  :)

Michael Spindler · Answer

Hi Lynn,

I do appreciate it.  Disappointed...  But that's the way it is I suppose.

Will need to revisit the 10 year plan with a workable solution.  I am open to suggestions at this point.

Have a great day.

Mehran K. · Answer

Michael Spindler, FNMA/FMAC Guidelines are 10 max. Lenders may have their own overlay guidelines, many banks go with 4 max. The banks that will lend past 4 loans will have tighter underwriting guidelines as far as down payment and reserves, etc.

Steve Foth brought up a good strategy couples use to get 20 conventional loans. Business partners can do this as well!

Keep in mind, these are just conventional loan guidelines. Portfolio lenders are another option after you reach your 10 loan limit. Look them up here on the forums.

Maxium number of properties (RMF)?

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