Cheapest money if you have 10 conventional resi loans already?

[Patrick K.]

Any advice on obtaining the cheapest money if you have 10 conventional residential loans? Our loan broker in CA told us rates would likely increase 100 basis points as FANNIE and FREDDIE won't buy them. Is this correct?

Thanks,

PK

[Kevin Romines]

Thanks for the invite to the conversation @Naveen Kumar. Naveen is correct. Fannie Mae will count any properties that you have in an LLC that you own 25% or more of as financed properties and you will be capped at 10 financed properties.

Here are the ways you can structure things and continue to add to your portfolio while still using Fannie Mae loans. If you are married, each spouse can have up to 10 financed properties in their own name individually so long as they can qualify based on their debt ratio and credit. 

There is no limit on the number of owner occupied and I think even 2nd homes that you can buy, so if your at 10 financed properties, you can go buy a new owner occupied home and turn your existing primary into a rental home. 

If your serious about future growth then you really need to open a sub S or a C corp and move 1 or more homes into the entity and get portfolio or commercial financing on it. It doesn't even matter if you are required to personally guarantee the loans, because they are in these entities, they wont count in the 10 financed properties rule. Therefore structured correctly, you can literally buy as many properties as you want. Now portfolio / commercial lenders also have caps, but they tend to go to much higher caps. Also if you have 3-4 good portfolio lenders, you can cover just about all you would want to cover.

At some point along the line you might start looking at multi's as most do, so start gathering good info there as well. If you need help on that, just PM me. I hope this helps?