I have heard that the 4 financed property rule plus your primary for #5 is affecting some investors ability to finance? As a matter of fact I have heard that alot, there are limited investors in the traditional channels that are doing more than the 5 properties.
I happen to know a few investors that will go to a max. of 10 financed properties via the traditional channels, but really wanted to know what others are experiencing?
Considering the unpresidented times that we are in, and also the rediculously good deals that are out there in some areas, the last thing anybody needs is issues in the financing arena holding them back from reaching their goals.
We’re using a local bank for commercial loans in our business name with my wife and I as guarantors. Financing is generally always for at least full purchase price and sometimes with a few to several thousand more for rehab if needed. No limits to the amount of loans. Currently paying 6.5% on 10 yr amortization. Some are blanket loans if we can get a couple deals to line up together.
I am also looking to purchase my 5th property and have been told by Wells Fargo that 4 properties is the limit. I guess I need to talk to my local small banks.
Bank Of America is one of our investors with our banking channel, but as you nailed it on the head, they can be very restrictive and hard to work with. Thats why I’m glad that we have many other options and are not limited to their headaches.
When B of A is saying a limit of 4 properties what that means is that you cannot own any more than 4 properties plus your primary home. If you do, they will not make a loan to you.
It doesnt mean that you can do up to 4 loans with them before they cut you off. Now to further confuse you, most lenders have a limit of the number of loans that they will give one borrower. Typically this is between 3-7.
I have several investors that will go to 10 properties and if you are using certain special Fannie Mae or Freddie Mac loans you can even exceed 10 homes owned and they will still give you a loan so long as the existing loan on the property is currently owned by either Fannie or Freddie.
There is a specific look up tool to determine if an existing mortgage is currently owned by either Fannie or Freddie.
US Bank is a pretty good option as they are a portfolio lender meaning they don’t sell for Fannie or Freddie or have to meet their guidelines. I would also try a local credit union. they are sometimes more lenient.