How Will the 4 Property Rule Effect You?
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.
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.
Wondering what the 4 property rule actually is? Fannie Mae and Freddie Mac announced in 2008 that the maximum number of financed properties a person can have is four. This crazy rule even includes a person's primary residence so really the maximum number of rentals is limited to three.
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.
Prior to the mortgage meltdown, most real estate investors took advantage of astronomical appreciation. They practiced what all good investors practice: buy low/sell high. Most investors were buying everything they could and mortgages were easy to come by. Some bought to flip, some held in their own rental portfolio and some bought properties in bulk. All of those activities pumped a lot of money into the 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.
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 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.
Wondering what the 4 property rule actually is? Fannie Mae and Freddie Mac announced in 2008 that the maximum number of financed properties a person can have is four. This crazy rule even includes a person's primary residence so really the maximum number of rentals is limited to three.
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.
Prior to the mortgage meltdown, most real estate investors took advantage of astronomical appreciation. They practiced what all good investors practice: buy low/sell high. Most investors were buying everything they could and mortgages were easy to come by. Some bought to flip, some held in their own rental portfolio and some bought properties in bulk. All of those activities pumped a lot of money into the 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.
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 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
6:05 AM
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