Posted by: Todd Long | February 20, 2009

Are we going to let Real Estate investors back into this market?

Fannie Mae has just agreed to lift the cap of 4 investment properties eligible for loans and raise it back to 10.  This news hasn’t been picked up by any of the big news media networks that I have found such as CNN or MSNBC.  A 10 property limit was the standard before 2008 and makes a lot of sense to me.  If you’ve been following my blog for awhile you may remember a post from last summer where I laid out my thoughts on how to sell all the foreclosures coming into the market.  In a nut shell, let the seasoned investors buy them and let frightened buyer rent them until they feel comfortable buying a home.  Don’t sell them to a new investor who can then only buy 4 before the money is shut off.  You can’t protect your investment with only 4 properties.  For example, if I am a new investor, buy 4 properties, get them all rented and then one tenant leaves, I have just lost 1/4 of my rental income.  That could be devastating.  But if I own 10 properties and one goes vacant i now have only lost 1/10 of my rental income.  Plus an investor with 10 properties has learned a thing or two about cash flow to cover a vacancy, getting a property fixed up and rented quick.  a seasoned investor is going to do everything possible not to have a propertyforclosed on because the other 9 could also then be at risk and certainly the possibility of buying more properties for the portfolio has been damaged. 

Let’s get these seasoned investors back in the game, NOW, and liquidate some inventory!

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Responses

  1. […] Read what my Broker-in-Charge thinks. […]

  2. […] a renter at any particular time.  Todd Long is our Broker-in-Charge and an investor himself.  Here’s his more involved writeup on this […]

  3. […] Read what my Broker-in-Charge thinks. […]


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