Let’s talk about how to finance more than 10 properties. As someone who has mortgages on over 30 rental properties, I can assure you that this 10 mortgage cap that Fannie Mae imposes…well you can just forget all about it.
If you’re unfamiliar with who, or rather what, Fannie Mae is, Fannie Mae is a government sponsored enterprise that buys mortgages on the secondary market.
Let me back up a bit
When you approach a banker to get a mortgage loan on an investment property, if that banker works for a bank that sells their mortgage loans (which most banks do), then their loans are likely purchased by Fannie Mae.
When banks sell their mortgage loans to Fannie Mae, they must adhere to Fannie Mae’s underwriting guidelines.
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One such guideline is that a single borrower cannot have more than 10 mortgages to their name. This poses a major restriction for investors wanting to grow their real estate portfolio.
To make matters worse, even though the limit is technically 10, most banks impose a cap of 4.
Solution: Work with a portfolio lender
Portfolio lenders are banks that keep some or all of their loans in-house; they don’t sell them.
Since portfolio lenders don’t sell their loans, they don’t have to listen to Fannie Mae. Because they don’t have to listen to Fannie Mae – you guessed it – they can give you as many loans as they want.
Now, I’m not suggesting they’re going to loan you an unlimited amount. In my experience, portfolio lenders will likely put a cap of 2-5 million. This will vary, though, depending on the lender and the location.
Furthermore, after doing a few loans with you, they will probably want to take a break, and let the loans “season” for a few months, before doing more loans with you.
Check out this post I’ve written about portfolio lenders to learn more about them, the questions they will ask you, and where to find them.
The only way to finance more than 10 properties is by circumventing Fannie Mae, and working with portfolio lenders. You’ll also find that portfolio lenders can usually offer financing that’s more favorable to investors.