Rental Property Investor · Saint Louis, MO · Member since 2012 · 115 posts · 42 votes
I currently have 3 rental properties and own the property I live in=4 mortgages.
I have heard that it is difficult to get financing after the 4th mortgage, does anyone know exactly what is different after 4? Reserves needed? I have also head 10 houses/mortgages is another barrier, is it possible to get financing on an 11th house? Are the restrictions simply for FHA loans, or do they also apply if I can put down 20%?
Also, when calculating estimated returns/cash flow, part of the mortgage payment is going to pay down principal, should this be considered in estimating returns as you are building up equity for yourself? It does not appear to be from what I have seen on biggerpockets. However interest rates are so low and as I am toying with 15 year mortgages a big chunk of my mortgage payments would be paying down principal from the start, and it seems like this should play some effect when considering returns.
Any advice would be appreciated!
Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
14y
There was a limit of up to 4 properties and then Fannie Mae changed the guidelines for conforming loans. Some banks though may still use stricter rules though.
This is probably not the latest announcement from Fannie Mae, but it should help clarify part of your question.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
14y
Yes, the principal reduced should be part of your financial position. I suggest you crunch some numbers and if reducing principal is your best use of funds with such low current rates (unlikely if you're an active investor) I suggest yo always take the longer amoritization and make additional payments to the mortgage. This way your ratios will be lower for additional financing and you will not be obligated to make a higher payment during vacancies or other times of financial concerns. That alon is usually worth the 1/8 to a 1/4 point on the interest rate, IMO.
Real Estate Investor · Provo, UT · Member since 2012 · 4 posts · 1 vote
14y
The limits in my experience are usually based on the banks doing the lending. I have had several clients get more than 10 mortgages if they go through Washington Federal, but they may only do it on a case by case basis.
Depending on your market area and cash reserves private funding may be your best bet overall to extend your reach.
Lender · Gilbert, AZ · Member since 2014 · 26 posts · 15 votes
12y
Sorry to be firing up an old thread, but Daniel B. I wanted to see if you had been successful in finding financing beyond 4. I work predominantly with investors and have financed thousands of investment loans #'s 5-10 with traditional FNMA loans. This is no real trick to it or any hit to the rate for it. There is an additional 5% down when you go beyond 4 financed properties, but very common with all my clientele. Feel free to reach out to me and I would be happy to provided you details on how this works.