Portfolio lending is becoming increasing popular. One of the reasons for this is portfolio lending is not restricted to the horrific 4 property rule. Through a portfolio lender, it is possible to acquire a multitude of mortgages. However, those looking to procure loans through entities such as Fannie Mae and Freddie Mac will run into the 4 property rule wall.

It is obvious that the $750 billion bailout did not do a thing to free up capital. And now the 4 property rule is a slap in the face to all real estate investors. In fact, this particular rule is a complete rejection of the principles that our capitalist society is founded on. In my opinion, the 4 property rule is designed to put real estate investors out of business. Just when the government should be inviting us to participate in the economic recovery.

Wondering what the 4 property rule actually is? Fannie Mae and Freddie Mac announced in 2008 that the maximum number of financed properties a person can have is four. This crazy rule even includes a person’s primary residence so really the maximum number of rentals is limited to three.

And, as an investor this includes your primary residence! Again, this rule does nothing to help real estate investors. It is simply protectionism. And, as we all know, protectionism usually backfires. It does absolutely nothing to help the market and overall economy. Instead, the 4 property rule can significantly weaken the economy.

Before the subprime meltdown, investors took advantage of rapidly increasing real estate values. They would purchase properties at low prices and then sell high. Sometimes, real estate investors purchased huge volumes of properties to resell. The affordable housing they provided had a positive impact on our economy.

If there were no 4 property rule, the sale of of real estate would lead to a number of positive effects. For example, the revenues generated would lead to increased liquidity. It would also generate significant tax revenue to the state and local governments. And, of course, affordable housing would be plentiful. With this 4 property rule, none of this is possible. Hopefully, this rule will be overturned so we can return to a free market approach to investment real estate.

The good news is, regardless of whether or not this rule is revoked, portfolio lenders do not have to follow this 4 property rule. If you have more than 4 financed properties (or hope to), a portfolio lender is what you need.