You pay cash. This is why the current prices of 3 and 4 plex properties have declined another 40%-50% in the Phoenix, Mesa , Scottsdale MSA (see graph linked below)since 8/08 when Fannie/Freddie (Agency lenders)instituted this brilliant ill timed rule. This after prices deflated roughly 40-50% after the 8/07 disappearance of the 0%, 5%, 10%, ( yes prices in this MSA are roughly 35 cents on the dollar of what they were)and even 20% down Wall Street Hedge Fund money that brought us this bubble. Talk about locking the barn door after the cows had all left. They should have instituted this 4 loan limit when they were making 0% down , no documentation loans, not after they have tightened underwriting so tight most properties and buyers don't qualify.
BTW Fannie/Freddie (Agency lenders)in 2/09 indicated they would purchase loans from lenders that were from investors who own up to 10 properties with conforming loans. Loans 5-10 are to be minimum 30% down and they are to have cash reserves for 12 more months not only on the property being purchased but for all other conforming loans outstanding. Yeah, right. It is less money to pay cash. Remember you can buy a 3 or 4 plex in this MSA for less than what the down payment used to be!
Personally I suspect this stupendous new rule has doubled or tripled the losses of the Agency lenders. As a taxpayer and an owner of some of these buildings I think the idiot that instituted this rule should be fired and forced to live in some of these resulting boarded up buildings.
LLoyd Kaipainen CCIM
Jul 15, 2009