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I am in the middle of purchasing my 5th investment property in the United States. We have put 20% or more down on all of them, and they have appreciated significantly since purchase. Also, each one has decreased our debt to income ratio (due to positive cash flow), allowing me to always buy more - theoretically up to the Fannie/Freddy limit of 10.

It has been vaguely communicated to me over the years, that if I start accumulating a lot of rentals (more than 5, and more than $500k in total debt.), I should start considering jumbo loans. However, aside from the fact that a jumbo loan can be over the conforming limit (not something I've needed yet for a single property), I don't see any benefits to having all properties on a jumbo loan or looking into it at all until I've approached 10 properties. Am I missing something here? I typically pay about 1/2 - 3/4 point higher on a non-owner-occupied single family dwelling. Is the benefit that I might find a lower interest jumbo loan? Also, I understand it might be easier to just pay one mortgage. Though, isn't that also a major con/risk if I ever defaulted (that I'd lose all properties and not just one?)

Looking for pros/cons. When should I be considering jumbo loans if ever and why?

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    From an asset protection POV, I hate it. If you default on the big loan, you lose all the properties. As things are now, if you get into trouble and can't pay all the notes, you can cherry-pick which properties to walk away from, i.e. the one in the rapidly declining neighborhood or the one where you discovered black mold. Keep in mind the market is "up" now, not a time to be increasing risk. Now's the time to stash acorns.
    – Harper - Reinstate Monica
    Aug 2, 2016 at 0:21
  • Agreed on all that. I have left my starting market (Denver), in favor of lower markets. I'm not buying investment properties in areas that have gone up 200% in 2 years. I got into those neighborhoods at the bottom, counted my blessings and am buying the next two somewhere more moderate with potential to increase, but still not back up to 2006 levels. Maybe the point is moot because even if there are financial benefits to jumbo loans, it wouldn't be worth the increased risk to me for the reasons you mentioned. Still want to know what the potential benefits are though.
    – maplemale
    Aug 2, 2016 at 0:44
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    Do all properties act as collateral for the one loan? What if you need to sell one or more, but want to hold onto the rest? I'd say keep em separated.
    – Pete B.
    Aug 2, 2016 at 12:38

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Carrying a single mortgage for all of your properties has the obvious advantage of only one payment to be concerned with each month rather than one for every property. It also makes things easier if you decide refinance at some point, and the size of the loan might get a better interest rate for you rather than a series of smaller loans.

That being said, as others have pointed out here, you're putting all of your eggs into one basket by doing this. If something goes wrong and you start having problems with your payments then all of your properties are at risk.

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