If you want to grow and scale your rentals beyond just one or two properties, investor mortgages are the key.

So this episode is a conversation with a mortgage expert who shares how to keep financing rentals

even when you hit a limit with your income or you run out of down payment.

Let's get started.

Welcome to the podcast Real Estate Investing with Coach Carson.

I'm your host Chad Carson.

You can also call me Coach Carson, and this is a show to help you get out of the financial grind so you can spend your time doing more of what matters.

My conversation today is with Brian Maddox.

He's a mortgage professional I have known and respected for years, and he's also a real estate investor. And what I really like about Brian is he knows about all of the different programs, all the different nuances. And what we're going to do today is go into the details of scaling a portfolio. How do we get there? What loan programs are best? So Brian, you've probably heard me say this before. But one of my favorite analogies with financing is that we have to have this toolbox of financing tools. So almost like a carpenter's building a house and they have to

have, you know, a saw and a hammer and a screwdriver and all this stuff. When financing, it feels like

to build like a financial house of rental properties is the same way. And I knew that you are like

the master carpenter of investor mortgage lenders,

and I would love to explore this. And the main idea I want to start with is that I'm a rental investor. I'm not brand new. I already own a few properties. And I want to grow more. Like I want to keep buying more. Maybe I want to own 10. Maybe I want to own 20. But the point is, I feel like financing is an obstacle to me continuing to grow. Maybe the down payments are an obstacle. So my first

question for it. own 20. But the point is, I feel like financing is an obstacle to me continuing to grow.

Maybe the down payments are an obstacle. So my first question for you would be, I want to talk about

like the vanilla type of loans, which for me is like a conventional loan. And can you talk to me

about like what that whole like vanilla conventional loan program is from an investor standpoint?

And then we can, maybe I'll have some follow up questions about, you know, how to apply it. That's a great question. And when you think about conventional financing, I kind of think of that as the gold standard, right? If you can do it, if you can survive it, because it is more work to do a conventional loan, it's going to get pretty intrusive with documents, especially once you start growing your portfolio. But the pain is worth the effort, typically, because you're going to get a loan with no prepayment penalties. Your interest rates are typically going to be the best that you can do. It's fully amitized for 30 years. So it's very predictable. You can keep that one loan forever. A lot of different loan types that we have to consider, we're going to see, you know, what's the downside? And we're going to compare it to that conventional loan, right? So if we can go conventional, is that going to be the best way in the gate? Typically, yes, unless you've got seven or eight properties and you just, it's okay to pay a little higher rate for the less hassle of another option. But conventional financing, I always tell people,

if you were able to buy your last house using a conventional loan, which is a Fannie or a Freddie loan,

then you should be able to buy an investment property. If you've got the cash for down payment,

you should qualify. One of the nice things about conventional financing is we can use

future projected rental income to help you qualify on that purchase. So if you qualified for your last refinance or your last purchase, ideally you qualify for this one on an income approach because we're adding income from this new house to help you buy. So that might be a first question that people have. If they're pretty new to it, they might be like, all right, I bought it. I have my principal residence, my house. I bought one rental property. How in the world am I going to keep buying more property? Because they've heard of this thing called a debt to find here at a second. But they feel like, oh, wow, the more mortgage debt I get, the less likely I can get another loan because I'm just going to run out of, you know, I've just got too many mortgage payments. So can you unpack that a little bit more and say, so you said that you could use the future rent of a property in order to help you qualify for the next loan? What does that mean? Yeah. So if you have a history of housing payments, right? You've owned a home for a year or you're on a lease agreement for a year. Then you have a history of housing payment. And when you have that history of housing payment, we use the future projected rental income. The appraiser actually

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