The New Law:
This law is going into effect on Dec 1st, 2008 and many lenders are already modifying now to comply with these new rules. This means that if you own 4 properties (and one of them includes your primary residence) you can't get a loan for that fifth mortgage via Fannie Mae. This means that most lenders won't do it and that you will not get the best rates out there.
Here are a few ways around this:
1. Use an LLC the only problem is that you have to document income for this LLC, it has to be more than a shell it has to be a real operating company. LLC loans are typically less favorable than typical non-owner loans in my experience (in terms of rate and documentation and LTV).
2. Go to a Regional or Local Bank you have to in effect find a portfolio lender or find a bank that would do the loan under their business or commercial lending division. I have done this for years with an LLC so it can be done but I know right now these regional banks are under pressure in this environment but it's worth a shot to call around. You will need one partner in the LLC with some sizable net worth in my experience. They will want a guarantee from that Principal.
3. Sell off some of your houses. This isn't easy but if you can opportunistically sell one at profit or breakeven and your tenant is moving out you should scan your portfolio. You can replace that house later with another house bought 30% off of retail value.
4. Wait Until Fannie Changes Their Guidelines. Who knows how long that takes? I think with the effective nationalization of this entity and the scrutiny, I think it could be a while. Then again if the market freezes up the US Government might loosen more and more to get the housing market on its feet.
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