It’s long been told that financing rental properties with a conventional mortgage is the best route. The rates and terms are the most competitive plus they’re long term with options of both a fixed as well as an adjustable rate loan. These programs are underwritten to Fannie Mae and Freddie Mac getting around the 10 unit rule for conventional mortgagesstandards. Over the years, these standards will change and sometimes it’s change for the better but also a change for the worse.

Active investors who acquire a property every year or every other year can leverage their own cash and finance up to 80 percent of the sales price. And lenders make it rather easy to qualify when more than one rental property has been closed, recorded and shows up on an investor’s income tax return.

For a time, the maximum number of financed properties a single owner could have was four, including a primary residence. Note this doesn’t mean four properties, it means four properties with mortgages on them. Rules soon changed and the limit was and still is 10 yet not all lenders will finance a borrower with more than four loans on the books. In fact, few do. But when an investor does reach the limit and wants to finance yet another rental, how does one get around the 10 unit rule?

The initial answer is to find a non-conventional mortgage from your bank. These are usually shorter term in nature and will have a balloon note as well as higher rates. There’s another way to get around the 10 unit rule and that is to swap around some equity. If there are rentals that are financed, is it possible to take equity out of one or more of the units and pay off existing mortgages on other properties, freeing up more room for another financed property? If it’s possible to pull equity out of one home to get rid of an existing mortgage on another, that’s a better option for those looking to keep the property in their portfolios.