I’ve done a few rehabs already but now Iam changing gears where I will rehab then refinance then rent. My question is once i refinance will this limit my ability to buy more properties to rehab and rent out. Is there a limit to the number of properties you can have before you can stop getting loans.
No, there is no limit. You can own as many rentals as you want.
Mike
I wonder this too. If I go for a lone one day after 10 house loans under the belt and the officer says no you are too risky with 10 house loans ect…
If I get a hard money loan to rehab a property then refinance out of the hml then rent the place out i can keep on doing this for as many properties as I want
You’ve proven 10 times that you CAN make money on rentals. The guy with 1-2 rentals has almost no track record.
Tell you what, buy 10 properties then when you get to that point you’ll figure out a way. Having no properties and worrying about what happens when you get to 10 is a waste of time. If you really think its an issue refi a few of them and take the cashouts to pay a few off and you’ll have some free and clear and the number will be less than 10.
It would be absolutely CRAZY to buy rental properties with hard money and then refinance. Just borrow the money from the bank and save uncle quido’s extortion rate hard money! Hard money is not compatible with rentals!
Good Luck,
Mike
I think what the “poster” was trying to ask- was is there a limit on your credit to how many loans you can have… I heard (a long time ago) the limit is 10 mortgages on your credit, then I heard from another mortgage broker (about 4 months ago) it was 19. I’m sure it all depends on your score and how much money you have in the bank. You have to be able to prove to the bank that if some/most of your renters suddenly stopped paying- Do you have enough money to continue paying those loans.
Now with that being said, look at the current mortgage crisis. I know they are VERY strict right now on investment loans. But again, if you have the credit and money you SHOULD still be fine. You need to ask a mortgage broker you can trust- who really does know what he is doing- how many can you have on YOUR credit.
And in regards to propertymanagers comment, I disagree completely! When you are purchasing a house at 65% or less and the seller- for what ever reason- has to close with in a week or so, yes Hard Money is the only way- then refinance. As long as the numbers still work, it doesn’t really matter how you get there. You can’t pass up on a good deal, just because its going to cost you a little more to do it. If you stand to make an absolute killing on the house- who cares! Make sure you are always looking at the right numbers, you can’t look at deals and say “well “so and so” is going to make 20K on this, forget that!
No, look at your profit. As long as you consider closing costs with hard money (always very high) plus rehab, then holding that HUGE HML pmt. Then closing costs again, and hold costs while you try to rent… Sometimes the deals really are that good. If conventional financing is an option- then of coarse- go for it! But most people selling that low, or wholesalers will not wait for you to go through the process of getting approved.
Lucky,
I find it ironic that you are offering “newbie mentoring” when you don’t seem to know ANYTHING about real estate investing yourself! Almost everything you’ve said since joining this forum has been wrong. In addition, you have continually violated the forum rules and I see that another of your posts had to be edited this morning!
And in regards to propertymanagers comment, I disagree completely!
That’s a good thing and just confirms that I am right!
I’m sure it all depends on your score and how much money you have in the bank. You have to be able to prove to the bank that if some/most of your renters suddenly stopped paying- Do you have enough money to continue paying those loans.
Another RIDICULOUS comment. If most of your renters suddenly stop paying, you will bleed cash and go out of business. Profit margins in the rental business are low and if most of your customers stop paying, you’re in deep trouble. Almost no-one could afford to build a significant rental portfolio if they were required to have reserves that would pay the loans (and of course the operating expenses) when most of their customers are not paying. That isn’t true in the rental business and it is not true in any other business that I know of. Just more fiction by Lucky!
Mike
Some companies (GMAC Mortgage, State Farm, and I think Capital One) won’t give you a new loan if you already have at least 10 mortgages (a 1st and 2nd on the same property counts as 2 mortgages)…Seems to go against the grain of a successful investor having multiple properties but that’s their deal…Others don’t care how many mortgages you have - they’re looking at your credit and cash flow…So it just depends on where you’re looking for the money…
for FreddieMac/Fannie Mae compliant loans, the limit is 10. Many banks follow this and some loan programs are even more restrictive to like 6.
Yes, you can get loans when your beyond 10 (I know for fact becuase I’m well beyond that point), but your range of options and lenders becomes pretty limited. One of the biggest things they are going to want to look at is your DTI (debt to income). Usually they take 75% of your gross rent in figure income and againt liabilties (i.e. mortgage payments). In my experience the amoutn of equity you have in the property does not seem to interest lenders too much as equity does not pay the mortgage; cash flow/income does!
This is correct in regards to fannie mae/ freddie mac. Keep in mind, most lenders will only let you finance a certain number of properties with themselves. I pretty sure Countrywide keeps it to 5 (that is 5 properties financed with CWide).
But I know several investors who have anywhere from 30-60 properties financed…so it definitely is possible.
You find the right broker/lender combo and you can get what you want.
In the current tightened lending market, if you have 10+ Fannie Mae loans, CW is pretty much the only choice available and you have to go full doc. I don’t know if CW does stated income for those with 10+ and if they do, the rate will be astronomically high. And CW will do up to 4.
A mortgage broker said BA will also do it (only wholesale, not retail), but he didn’t perform, so who knows?! All other brokers we contacted came back with CW only or NONE. Also, one broker said CW changed the guideline AGAIN at the end of Sept and it won’t refi at more than 70% LTV. (The guidelines are changing every week or two now.)
More portfolio lenders were available until earlier this year, but they are pretty much gone.
However, unless you’re hitting close to 10 now, why worry? By the time you acquire 10 rentals/mortgages, the lending market/guidlines will have changed anyway 
When you run out of national lenders you need to start looking at your local banks that hold loans in their own portfolio or start looking for private money.
What about a commercial wrapping those 10 loans? Can’t believe nobody has mentioned that. If you have equity, score, and cash, shouldn’t be an issue
The annoyance there is when you want to sell one of, you either have to refi or sell the whole bunch. I’ve seen guys that were forced to sell their properties in a group and they couldn’t move them and they sat on the market forever, most folks just can’t buy 10-12 properties in one chunk. You really limit your resale market bigtime to a slim minority and most of the time when someone buys a chunk like that they want a deep discount. Oh, and if you think you can just refi to get one out of the group think about the fees for refinancing.
The number one thing you need to do is to actually take a look at your personal financial situation. The question is really not whether you can get 10 or 15 loans, the real question is are you able to handle that many properties.
You really need to look at what you are trying to accomplish from two perspectives. The first one is are you able to handle a multiple of rental units. There are construction, maintenance, tenant, vacancy, evictions and tons of other issues that will come up. The second perspective is the financial one. Anyone that has owned multiple rentals will tell you the costs always end up being higher then you anticipate. Bottom line is that you better have cash reserves to be in the rental game.
The best advice I can give you is to start slow and make sure you are learning as you go. Who knows, after owning just a few properties you may never even get to the magic number of 10.
I hope this helps…
Anyone that has owned multiple rentals will tell you the costs always end up being higher then you anticipate. Bottom line is that you better have cash reserves to be in the rental game.
While cash reserves are a good thing, the important thing is to actually understand the business. Throughout the United States, operating expenses run 45% to 50% of gross rents. If you use 50% and if you manage the tenants properly, you should be paying all of the expenses out of your business income (not out of your pocket) AND STILL HAVE A POSITIVE CASH FLOW.
Mike