Understanding Initial financing

[Link McGinnis]

My goal is to get into quite a few rental properties so I want to make sure I start right.

As I read how others have acquired rental properties, they almost always mention that investors are stuck with 4 conventional loans before they have to get into some creative financing and so their advice is to buy the most expensive properties early - in those first 4 slots. But, I think they are talking about a Fannie/Freddy restriction which comes into play as they use banks that sell their loans in the secondary market..

I have a friend with 100+ rentals who told me to use a HELOC to purchase and then refi. My community bank (I don't think they sell to secondary market) seems to agree with this strategy and is pursuing it.

Am I going to run into problems with future financing?

If the refis aren't gov't backed, then are there any restrictions that would hold me back?

Am I going to run into other restrictions; debt to income issues?

Will any of this affect the types of properties I should start with?

Thanks for your help!

[Dawn Anastasi]

Regarding loans -- you definitely want to make sure your DTI is low enough; if you're drowning in debt no one is going to lend to you.

Also make sure you have enough reserves on hand -- meaning, you need money in order to borrow money.

If you can get a conventional fixed rate 30-year loan that is great.  Portfolio lenders may do 15 year loans or ARMs only.