Financing Growth Beyond 10 Properties (Portfolio Loan?)

[Michael M.]

Hi all,

I have a portfolio of 8 properties (SFRs and 2-plex/4-plexes, each with a 30-year fixed mortgage).  In aggregate the portfolio is at ~50-60% loan-to-value and fully stabilized, with minimal vacancies. Everything is in the Carolinas and Texas.  

As I continue to scale, I have heard I will hit a limit at 10 mortgages due to traditional lending guidelines.

Does anyone have thoughts on how they would recommend financing growth beyond that point? 

One suggestion I have heard is that I could use some of my equity to 1031 exchange into bigger multifamily properties, but I would rather not sell any of my holdings.  

What about portfolio loans with a local bank or something like CoreVest? 

What's stopping me is that the rates on some of the rental portfolio loans I've seen are much worse than traditional fannie / freddie backed mortgages. I was thinking I'd get 10 conventional mortgages due to favorable rates, and then after I hit the limit, use a portfolio lender. 

Would be very grateful for any of your thoughts or suggestions. Thank you!

[Chris Mason]

Short term, shift debt around so some are at 75% LTV and some are free/clear. If you have no mortgage on a property, it does not count towards that cap of 10 financed properties, because that property is not financed. 

Medium term, COVID will be over, there's no point in trying to plan for what that world looks like, I wouldn't even suggest bothering. All those "5 year" plans made in 2019 are in the trash now anyways, right?

Long term, "his and her mortgages." The cap is per person, not per family. She can have 10. And he can have 10. Get things out of joint mortgages. Feminism happened, so I think we can trust that in the long term it will not be held against Spouse A what Spouse B is doing, provided there is no joint title, no joint mortgage, and so on. A wife can get a car loan without the car dealership asking ten thousand questions about the husband's car and car loan, etc, and that's here to stay.