How many mortgages is too many?

Question

So I’ve been reading books on buying several rentals all on mortgages as soon as you get another down payment. My question is when will the bank normally stop lending you money?

For example can I go out with 200,000 and buy 5 properties with 40,000 down or will they not give me that many mortgages?

Does spacing purchases out with time help?

Javier D. · Answer

@Caden Bradbury

Fnma guidelines limit is 10. After 4 you will get resistance. Speak to a local mtg broker

Lindel Turner · Answer

@Caden Bradbury

I think on the 30yr about 6 not sure. But each banker had his spending limits before he goes to the board. I use every bank in town. I get tired of waiting on board to give me an answer. Some times take over a week.

James R. · Answer

@Caden Bradbury

Could you currently qualify for a mortgage on a  $1,000,000 property? If yes, then finding a lender for 5 x 200k properties should be easy. If no, then why would a bank give you five 200k mortgages?

As you gain rental properties and rent them out you are able to count the rent as income which helps your debt to income ratio. This will then increase the amount of mortgage debt you can have.

Talk to lenders to find out what you can qualify for. Some allow a max of four mortgaged properties while others will do ten. At that point you can look at portfolio loans, commercial loans, blanket loans, etc.

Kenneth Garrett · Answer

@Caden Bradbury

If you are talking about residential mortgages your DTI is going to come into play.  You have to be able to support the mortgages.  Spreading them out would help, but there are so many factors with underwriting.  It’s not a simple yes or no.  Talk to some lenders about your strategy.  Each lender is different.  I try to use multiple lenders so all my eggs aren’t in one basket.

If you get stuck on residential mortgages you can always go to commercial mortgages.  You will need an LLC, ownership not in an entity,, operating agreement, EIN number, and property must cash flow.

Good Luck.

Jeremy A. · Answer

some of us have no option but to buy one good 3-4 unit deal, fix up, force appreciation increase value and 6-12 months later refi to bank roll next bigger property. rinse and repeat

dti ratio does increase but ratio should be less than the noi increases or not "good" deal. banker will ensure your still under 43% on backend to protect the asset and risks. if want ensure that bring proof new signed leases by tenants if buying occupied.

now done both. commercial is less restrictive overall less federal hand holding seemed faster.

Lindel Turner · Answer

@Caden Bradbury

Need a banker to pipe in in this one. However you need to buy one minimum down make sure you like it before sinking the entire 200k

Caden Bradbury · Answer

@Stephanie Potter

Oh wow thank goodness my wife is on board!

Thank you

Stephanie P. · Answer

Experience matters and may impact your maximum loan to value if you go with a commercial type loan.  Your best bet is to use Fannie Mae/Freddie Mac (conventional or conforming) money to buy your first 10 homes.  If you are married and your wife is supportive, the two of you can purchase up to 20 (10 for you and 10 for her); that is if you qualify.

If you get to a point where you don't qualify for a conventional mortgage, commercial is the way to go.  No income verification means no tax returns, W2's or paystubs and much easier qualification.

Stephanie

Nick Rutkowski · Answer

@Caden Bradbury

Ask your local lender about the limit one person could have. They should give you a better idea.

How many mortgages is too many?

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