Financing up to four properties is relatively easy, if you have the income. When you get beyond four, things get a lot trickier. Although Fannie Mae guidelines allow up to 10 financed properties, the reality is that many banks do not go up to the full 10. The majority only go up to 4. When counting, note that they are not counting loans but are counting financed properties. For example, you might have a second loan on a property. This is not an additional financed property, but a single financed property. You may have a blanket loan that covers three properties. This is counted as three financed properties, not one. Also note that commercial loans on 5+ unit multifamily buildings are usually not included in the count. A commercial loan on a single family house or a duplex is included in the count.
Also keep in mind that after you go beyond 4 financed properties, cash out refinances were once extremely difficult. They have become possible again. Post-COVID shutdown, they may again become extremely difficult. If you need liquidity, get your refi done now.
If you look hard enough, you will find some banks that will go up to 10. They will need you to show cash reserves for all your financed properties, not just the one you are buying. However, your 401k or IRA can be used, at a discount, for some of the cash reserves. After all, who has a bunch of cash lying around in a bank account earning 0-1 percent interest. This may change as requirements are tightening during the COVID crisis. We may soon need to have all the reserves in cash in a bank account, for 6 months of PITI for all financed properties.
Banks are being required to grant forbearance to customers who cannot pay, and that means that they are not liquid. They are doing second (updated) income verifications a couple of days before closing. Banks are requiring more than the Fannie Mae guidelines. These are called overlays. Rules are always changing so see a mortgage broker or credit union and ask.
For a single family investment home, if you have more than 4 financed properties, you will be looking at 75% loan to value (25% down). For a duplex or multifamily, you will be looking at a 70% loan to value 30% down.
The rules can and do change, this is just my understanding of the present guidelines.
Here in the Spokane WA and Cheney WA markets, lenders that will go up to the full 10 financed properties include Washington Trust, Umpqua, Wells Fargo, Flagstar,and Boeing Federal Credit Union.
The majority of banks and lenders follow the Fannie and Freddie guidelines. That means that almost all lenders have pretty much the same products. They typically have very similar rates too. (When comparing rates, always compare APRs, not just the rates. A standard trick of lenders trying to get your business is to quote low rates but high points and fees. This means that the actual APR you are paying will be a lot higher than the rate they quote).
There are other options. Sometimes the conventional Fannie and Freddie Mac loans take too long to process because of their strict guidelines.
Commercial loans are designed for investors who have a lot of properties.
Also, portfolio lenders (those who keep the loans in their portfolio instead of selling them) are not required to follow the Fannie and Freddie guidelines. They can typically close loans much quicker with a lot less paperwork. However, they will almost always be 3 or 5 year ARMS even if amortized over 25 to 30 years. This means that the rate readjusts after 3 or 5 years.
Wells Fargo has a 15 year fixed rate commercial loan with a 15 year amortization. That is a decently long term.
Also, the portfolio or commercial rates will often (but not necessarily) be higher than the rates for 30 year fixed conventional loans. There may also be prepayment penalties. Also, the contracts do not incorporate the consumer protections built into conventional loans. The lender may be able to call the loan due in more situations, if they feel uncomfortable about your ability to repay, they can take over your rents, they can empty your bank accounts (more than one), etc. Read the contracts carefully and consider the risks versus rewards.
Portfolio lenders in the Spokane WA and Cheney WA local area include Spokane Teachers Credit Union, Wheatland Bank, Bank of Fairfield, and Inland Northwest Bank, There are probably others. Just call each small bank and ask if they do any portfolio loans. Look for farm banks in particular, they usually do portfolio loans.
There is also another alternative–subprime or hard money lenders. Subprime lenders require even less paperwork and less verification of funds. However, they take a bigger chunk of your hide. They usually have fairly big loan fees, like 4 points, ensuring that they make a profit. Their rates are usually 3-4 percent higher than conventional lenders. And they usually have a prepayment penalty whether you sell or refinance early. Still, they can be a good choice for flippers or rehabbers who need cash quickly and expect to make a high enough profit that the more expensive financing is not a big concern. They may not even be able to finance in other ways as some repos are not in livable condition and not eligible for conventional financing. Think long and hard and make sure you understand all the terms before going with hard money loans.