Wife/Husband - who should buy houses

[Anthony Charles]

I am going to purchase two investment houses (single-family homes, SFH) this summer, and would like to do another two next year.

I need advice on whose name to title the property, and how to proceed with the mortgages.

Here's the situation

House A (my primary residence)
House B (wife's primary residence; she also rents to a roommate)

We just got married, about a year ago, and because of school & jobs will likely be separated for a bit longer. House A & B are in different states.

House C (investment property - SFH)
House D (investment property - SFH)

We are purchasing these this summer. The houses are located directly next to one another.

Currently, I have qualified for the mortgages b/c my wife is still in school and therefore has no material income (~15k/year).

Both of us have very good credit scores, but her income poses problems when it comes time to get a mortgage.

My current intention is to have the mortgage in my name, and the title of the properties in both our names.

However, next year we would like to purchase another two houses.

House E (investment property - SFH)
House F (investment property - SFH)

My concern is that there seems to be some rule, or difficulty, in securing more than 4-mortgages in the same persons name.

How does this rule work - does it only depend on the mortgage? Or does it matter whose name is on the title?

How should I get these the mortgages and titles of these investment properties? Both this year, so I don't create a problem in the future, and next year.

Somewhat related - am I going to run into a problem next year b/c 2-years of rental income on the tax return are needed in order for them to count?

Also, if we file jointly (taxes) - who does the rental income count towards? For example, next year will I be able to count my wife's roommate rental income on my loan application for the new houses?

Any advice would be appreciated.

[Jon Holdman]

Perhaps this is somewhat state dependent. I have two properties here in CO that I own without my wife. On both of these properties, I'm the only one on the title and I'm the only one on the deed of trust. If she had income (and the desire) to cover a mortgage separately, my wife could buy properties in here name. Since we own our primary together, we could theoretically each buy three more houses. When I took out these loans, the lender did not request her to be on the loan or on title.

If you have enough income to cover the mortgages without the rental income, you won't have a problem. I believe if you need to include the rental income to qualify then you may indeed have a problem until the rents have shown up on two tax returns.

You really need to find a smaller, local bank that does real estate loans and have a conversation with them. While there are Fannie Mae guidelines, you may be able to do something different if you have the right lender. You may find lenders pretty skeptical about this sort of business plan until you have a track record. Buying four investment properties in 15-18 months may prove to be a challenge.

Also keep in mind that down payments are pretty high - 20-25%, maybe even 30%. So, you'll need some serious cash. The lender will also want to see cash reserves in the bank.