"Four Limit Rule"

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Mcdonna1980_IHB

Mcdonna1980_IHB

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A friend of mine owns 8 investment properties and 1 personal residence. They are trying to refinance and were told they can't because of the "Four Limit Rule". Their broker says they have to unload 4 of the properties in order to refinance.

Anyone familar with this rule? Any sucess getting around this rule?
 
Mcdonna1980 said:
A friend of mine owns 8 investment properties and 1 personal residence. They are trying to refinance and were told they can't because of the "Four Limit Rule". Their broker says they have to unload 4 of the properties in order to refinance.

Anyone familar with this rule? Any sucess getting around this rule?
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I have never heard of this rule. Are they looking to refi their loan on their primary residence or on their investment properties? Typically the underwriter should take the most recent tax return and figure out the cash expenses and then take the lease/s and discount them by 25% to determine the true cash flow gain or loss on each investment property. Those amounts should be aggregated into an overall net income or loss for all of the investment properties and either be added to income (if they generate income after the adjustments) or added to monthly debt obligations (if they generate a loss after the adjustments). At the end of the day, this whole thing just determines the borrower's DTI.
 
Your friend needs to find another lender.

The 4 property limit rule went out about 60 days ago. You can have unlimited non-owner properties now. Some lenders have limits on how many loans to one borrower (ours is 4, any combo owner/non-owner).

My .02

SGIP
 
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