Is there a limit to how many properties one can buy?

Question

Say you have $60k leftover every year to invest in rentals. Assuming 25% down, that's a couple homes valued at $120k a piece that one could invest in. I'm sure most banks would allow you to have 2 homes financed; however, this would add up in the longterm and I'm not sure banks would loan you any more money when you already have 15 or so rentals under finance.

How does this work for those with plenty of money to invest? Do they just move on to bigger investments like commercial?

Brie Schmidt · Answer

You can have up to 10 conventional mortgages in your name, and 10 in your spouses.  Note that the rules change after 5 properties and one of the restrictions is you cannot cash out refi on any property except your primary.

The other option is commercial financing, which you can do unlimited properties (even SFH) but the rates and terms are not very good

Hai Loc · Answer

You can own as many "fee simple" properties as you like. When it comes down to "leasehold and condo" they may have restrictions.

I don't understand why someone would want to have up to 10 personal loans. I understand the BRRRR strategy but why would you want to have 10 homes with debt when you should be paying off the ones with the lower balances to 0 and carry 7-8 homes with 65-80% LTV.. You better off having full control of 2-3 homes vs 0 when the debt service is the same.. I understand if you buy it as a portfolio or packaged but if you buying 1-2 at a time you should never reach 10 mortgages unless you buy them in a short span or your BRRRR didn't execute..

Alina Trigub · Answer

@Mike Brown

As @Brie Schmidt mentioned, you can have up to 10 personal loans. After that either portfolio loans or commercial. Another option is to partner with someone to have loans under their name. You can also consider obtaining a private loan. As for going into commercial, it is really a matter of personal choice: do you want to stick to what you know or prefer to grow/scale.

Here're some additional details on my take of going from SFH to MFH: https://www.biggerpockets.com/member-blogs/10850/87253-should-i-scale-my-investment-from-single-family-homes-to-multifamily

Ned Carey · Answer

@Mike Brown there is absolutely no limit to the number of properties you can buy. There is also no limit to the number of mortgages you can have.  But there are many kinds of lenders and many kinds of mortgages. The most common type as @Brie Schmidt are limited to 10 but there are commercial lenders that will do more and you can get one loan to cover multiple properties.

John Teachout · Answer

I agree with @Hai Loc that paying some homes off along the way would be a wise strategy rather than have loans on ALL of them.

Salvatore Lentini · Answer

Hi @Mike Brown - There are plenty of alternative lenders out there.  I've worked with many of them to build my portfolio of 127 rentals.  Yes, rates are a little higher but the loans are easier to get because they underwrite the property and not you.  Different process than traditional banks in that you don't have to sign over your first born to qualify.

Roy Nash · Answer

I owned 6 MFH units and inquired about a Cash Out Refinance on one and my loan broker had no issues at all.   The same broker financed all my properties so they certainly knew my situation.  I didn't actually do the deal.   So now I am wondering about how firm the restrictions are on cash out refi after 5 properties based on the comments above.

Randy Rodenhouse · Answer

@Brie Schmidt yes

Kerry Baird · Answer

@Randy Rodenhouse, she’s talking government backed, Fannie/Freddie. What lender did you use?

Brie Schmidt · Answer

With residential financing in your personal name?

Is there a limit to how many properties one can buy?

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