Exploring the 4 Property Rule
Portfolio lending is becoming increasing popular. One of the reasons for this is portfolio lending is not restricted to the horrific 4 property rule. Through a portfolio lender, it is possible to acquire a multitude of mortgages. However, those looking to procure loans through entities such as Fannie Mae and Freddie Mac will run into the 4 property rule wall.
Obviously new lending rules were needed to curb the losses of hundreds of lenders that are now out of business. But, in my opinion, the 4 property rule is ridiculous. In fact, this rule borders on Socialism. The 4 property rule severely hinders the ability of a real estate investor to continue doing business.
So, what specifically is the 4 property rule? Essentially, the new rules of conventional lending state that a person will be limited to four financed properties at one time. Again, this is a thoroughly absurd rule that undermines many benefits of real estate investing. Basically, if you are limited to only four financed homes, you can not flip property in vast numbers.
And, as an investor this includes your primary residence! Again, this rule does nothing to help real estate investors. It is simply protectionism. And, as we all know, protectionism usually backfires. It does absolutely 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.
Portfolio lenders, thank goodness, are not bound by this crazy rule. If you need to finance multiple properties, a portfolio lender should be your new best friend.
Obviously new lending rules were needed to curb the losses of hundreds of lenders that are now out of business. But, in my opinion, the 4 property rule is ridiculous. In fact, this rule borders on Socialism. The 4 property rule severely hinders the ability of a real estate investor to continue doing business.
So, what specifically is the 4 property rule? Essentially, the new rules of conventional lending state that a person will be limited to four financed properties at one time. Again, this is a thoroughly absurd rule that undermines many benefits of real estate investing. Basically, if you are limited to only four financed homes, you can not flip property in vast numbers.
And, as an investor this includes your primary residence! Again, this rule does nothing to help real estate investors. It is simply protectionism. And, as we all know, protectionism usually backfires. It does absolutely 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.
Portfolio lenders, thank goodness, are not bound by this crazy rule. If you need to finance multiple properties, a portfolio lender should be your new best friend.
About the Author:
Susan Lassiter-Lyons has been teaching real estate investors the secrets to investor financing since 2002. Her free report, The Death of Real Estate Investing, reveals how to find portfolio lenders nationwide.
posted by Debt Consolidation Loan at
6:17 AM
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