Let's face it. It's going to get harder and harder to obtain financing in this market where the debt instruments are as scarce as water is in Sahara Desert. In fact, take a look at the Fannie Mae limit guidelines for single family loans (as of the date that this post was written):

 

Single-Family Mortgage Loan Limits effective January 1, 2008: 
First mortgages 

• One-family loans: $417,000
• Two-family loans: $533,850
• Three-family loans: $645,300
• Four-family loans: $801,950

Note: One- to four- family mortgages in Alaska, Hawaii, Guam, and the U.S. Virgin Islands are 50 percent higher than the limits for the rest of the country. 

Second mortgages 

• $208,500
• In Alaska, Hawaii, Guam, and the U.S. Virgin Islands: $312,750

 

What do you do? Dig up your own pond for others to drink out of (in a sense).

 

Seller financing, a.k.a. owner financing, seller note, owner/seller carryback, etc., is going to be a very very attractive method of financing the transaction. But why would anyone want to be the bank and hold a 30 year loan over straight up cash? Well, there are many reasons and here's a pretty good explanation of why a seller might consider it.

 

But you have to be careful as the buyer (i.e. who's receiving the note) OR the seller (i.e. who's the giving and holding the note) as there are risks to ANY debt instruments that are paid over time. Especially, if it's a wraparound.

 

Take a look at this well detailed blog post to get a feel for what's involved. And if you're doing a wraparound note, it's definitely tricker, but not impossible. But apparently, existence of seller note during a 1031-exchange might be a problem.

 

I recommend you seek out this method of financing, as it is cheaper (in fees, but might be higher in rate) and faster to close than traditional bank financing.