If you are looking to finance real estate, portfolio lending may be the way to go. One of the reasons for this is portfolio lending is not restricted to the new 4 property rule. With a portfolio lender, it is possible to finance an unlimited number of mortgages. However, those looking to get loans through conventional lenders such as Fannie Mae and Freddie Mac will run into the 4 property rule.
It is obvious that the $750 billion bailout did not do a thing to free up capital. And now the 4 property rule is a slap in the face to all real estate investors. In fact, this particular rule is a complete rejection of the principles that our capitalist society is founded on. In my opinion, the 4 property rule is designed to put real estate investors out of business. Just when the government should be inviting us to participate in the economic recovery.
So, what exactly is the 4 property rule? Well, the new conventional lending rules according to Fannie and Freddie state that a person will be limited to a maximum of four financed properties. This ridiculous rule takes away the ability to invest in real estate in the long term. If you are limited to only four financed properties, you can not flip many properties simultaneously or have a rental portfolio of any significance.
Specifically, if you are still financing your primary residence, you can only flip three properties if they are currently being financed! Again, this type of rule does very little for aiding investment circles. Really, it is a form of protectionism. And, as history shows, protectionism has the inverse consequence of what it was originally intended. That is to say, it does nothing to help the market and overall economy. Instead, the 4 property rule can significantly weaken the economy.
Before the subprime meltdown, investors took advantage of rapidly increasing real estate values. They would purchase properties at low prices and then sell high. Sometimes, real estate investors purchased huge volumes of properties to resell. The affordable housing they provided had a positive impact on our economy.
If the 4 property rule went away, there would be many positive effects. First, real estate investors would have to put their profits somewhere and my bet is they would go to the stock market. That in itself would provide a huge amount of liquidity. It would also fill up the tax coffers. And, of course, the wealth created would lead to more real estate being purchased thus improving values overall. The 4 property rule accomplishes none of this. I hope this rule will be overturned so we investors can fully participate in and contribute to the economic recovery.
The good news is, regardless of whether or not this rule is revoked, portfolio lenders do not have to follow this 4 property rule. If you have more than 4 financed properties (or hope to), a portfolio lender is what you need. - 15224
It is obvious that the $750 billion bailout did not do a thing to free up capital. And now the 4 property rule is a slap in the face to all real estate investors. In fact, this particular rule is a complete rejection of the principles that our capitalist society is founded on. In my opinion, the 4 property rule is designed to put real estate investors out of business. Just when the government should be inviting us to participate in the economic recovery.
So, what exactly is the 4 property rule? Well, the new conventional lending rules according to Fannie and Freddie state that a person will be limited to a maximum of four financed properties. This ridiculous rule takes away the ability to invest in real estate in the long term. If you are limited to only four financed properties, you can not flip many properties simultaneously or have a rental portfolio of any significance.
Specifically, if you are still financing your primary residence, you can only flip three properties if they are currently being financed! Again, this type of rule does very little for aiding investment circles. Really, it is a form of protectionism. And, as history shows, protectionism has the inverse consequence of what it was originally intended. That is to say, it does nothing to help the market and overall economy. Instead, the 4 property rule can significantly weaken the economy.
Before the subprime meltdown, investors took advantage of rapidly increasing real estate values. They would purchase properties at low prices and then sell high. Sometimes, real estate investors purchased huge volumes of properties to resell. The affordable housing they provided had a positive impact on our economy.
If the 4 property rule went away, there would be many positive effects. First, real estate investors would have to put their profits somewhere and my bet is they would go to the stock market. That in itself would provide a huge amount of liquidity. It would also fill up the tax coffers. And, of course, the wealth created would lead to more real estate being purchased thus improving values overall. The 4 property rule accomplishes none of this. I hope this rule will be overturned so we investors can fully participate in and contribute to the economic recovery.
The good news is, regardless of whether or not this rule is revoked, portfolio lenders do not have to follow this 4 property rule. If you have more than 4 financed properties (or hope to), a portfolio lender is what you need. - 15224
About the Author:
Susan Lassiter-Lyons has been teaching real estate investors all about investor financing since 2002. Her free report, The Death of Real Estate Investing, reveals how to find portfolio lenders nationwide.
