How Many Mortgages Can I Hold

Most investors are aware of the fact that they can only have one FHA loan on their books at a given time, (with a few notable exceptions). The amount of total mortgages that you can carry is not set in stone, but currently in MA it stands at four. You will discover this trend when seeking finance for that fifth investment property or for a secondary mortgage. Lenders typically deny the loan based on over leverage of  your current real estate assets.

While it may be very prudent of lenders not to further invest in a heavily mortgaged investor, it does put a cap on forward progress for many property investors. Be aware that secondary mortgages such as equity lines of credit are included in this valuation. If you have a property that has basically two years left on a primary but has a full load on an equity line, you may be tempted to restructure to consolidate. This may free up a mortgage spot in the cap of allowed loans but I advise against the action.  Since the equity line probably has a very low interest rate and you are essentially paying down pure principle on the primary, I would wait it out and simply pay off the primary.

A secondary option involves a little bit of juggling. If you have enough equity built up in the other properties, enough to pay off one of the other mortgages, this may open up that slot. This might be a good path if the new loans do not add years onto the other mortgages and the interest rates will be better than the original rates. The tricky part is having enough liquidity left to purchase that next investment property.

Most investment property owners are constantly seeking to leverage their way into more investments. There are a few other ‘gray area’ tricks that can be used to downplay an individuals debt portfolio, but I tend to keep these posts on the straight and narrow. Leveraging capital for future investments can be a very complicated task to say the least, but as one of my tenants recently stated; ‘if being a landlord was easy, then everybody would be doing it’. Being over leveraged is never a good thing but I do believe there is such a thing as ‘good debt’.

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