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 understandable that new rules need to be put in effect to prevent the fiasco that precipitated the nefarious $750 billion bailout bill. However, the onset of the 4 property rule is among the most egregious. In fact, this particular rule is a complete rejection of the principles that the free market is founded on. That is, the 4 property rule is a massive overreach of government regulation designed to limit the free market. Worst of all, this type of regulation limits a great deal of personal liberty and freedom.
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.
For example, prior to the current economic meltdown, many legitimate investors took advantage of skyrocketing real estate values. They would purchase properties at low prices and then sell high. In some cases, real estate investors would purchase significant volumes of property for resale. Some investors would purchase literally dozens of properties for resale. The profits derived from this wholesaling had an enormous benefit on the overall economy.
That is, in the absence of the 4 property rule, the sale of massive volumes of real estate would yield a number of positive effects. For example, the revenues generated could be invested into the stock market. Once invested, it would provide liquidity to many different companies. It would also generate significant tax revenue to the state and local governments. And, of course, the wealth created by this multiplexing of real estate sales would greatly expand purchasing. This would improve the economy in other sectors of the market. With the onset of the 4 property rule, all of this would cease and much of the economy could be undermined. Hopefully, this rule will eventually be revoked and return a more free market approach to the world of real estate.
Then again, regardless of whether or not this rule is revoked, portfolio lenders are not restricted to such a rule. If you wish to seek massive financing, a portfolio lender is the lender to visit.
It is understandable that new rules need to be put in effect to prevent the fiasco that precipitated the nefarious $750 billion bailout bill. However, the onset of the 4 property rule is among the most egregious. In fact, this particular rule is a complete rejection of the principles that the free market is founded on. That is, the 4 property rule is a massive overreach of government regulation designed to limit the free market. Worst of all, this type of regulation limits a great deal of personal liberty and freedom.
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.
For example, prior to the current economic meltdown, many legitimate investors took advantage of skyrocketing real estate values. They would purchase properties at low prices and then sell high. In some cases, real estate investors would purchase significant volumes of property for resale. Some investors would purchase literally dozens of properties for resale. The profits derived from this wholesaling had an enormous benefit on the overall economy.
That is, in the absence of the 4 property rule, the sale of massive volumes of real estate would yield a number of positive effects. For example, the revenues generated could be invested into the stock market. Once invested, it would provide liquidity to many different companies. It would also generate significant tax revenue to the state and local governments. And, of course, the wealth created by this multiplexing of real estate sales would greatly expand purchasing. This would improve the economy in other sectors of the market. With the onset of the 4 property rule, all of this would cease and much of the economy could be undermined. Hopefully, this rule will eventually be revoked and return a more free market approach to the world of real estate.
Then again, regardless of whether or not this rule is revoked, portfolio lenders are not restricted to such a rule. If you wish to seek massive financing, a portfolio lender is the lender to visit.
About the Author:
Susan Lassiter-Lyons has been teaching real estate investors all about investor loans since 2002. Her free report, The Death of Real Estate Investing, reveals how to find investor loans nationwide.
Posts
No comments:
Post a Comment