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Tuesday, 15 January 2019 06:00

4 Benefits of Using a Blanket Loan to Improve Your Real Estate Portfolio

Benefits of Using a Blanket Loan to Improve Your Real Estate Portfolio Rental Home FinancingNothing can compare to a large portfolio of rental properties in terms of securing your financial future.

The benefits of owning just a single rental property are significant. Owning multiple homes means greater cashflow, equity, opportunities for diversity, and, of course, a large payout if/when you decide to sell.

Of course, before you can enjoy all of these attractive benefits, you need to actually finance such a portfolio. For the first couple of properties, your local lender may be an option.

However, to build out the kind of portfolio that becomes your main – or even sole – source of income, you can’t do better than a blanket loan.


4 Reasons a Blanket Loan Will Help Boost Your Real Estate Portfolio

Again, when you’re just starting out, it’s worth exploring what your bank and other traditional lenders can offer you.

It’s when you reach the point that you want to really expand your real estate portfolio by buying multiple properties at once that you almost have to turn to a blanket loan.

Here are the four most important reasons why.

1. A Blanket Loan Is the Most Convenient Option for Large Portfolios

We couldn’t write a blog post about the benefits of a blanket mortgage without mentioning the most obvious: convenience.

At some point, many real estate investors’ portfolios grow so large that they’re no longer content to purchase just one property at a time. Going forward, they will always opt for buying multiple properties at once.

This is unrealistic for those who cling to traditional loans. Most lenders won’t even offer them to someone who owns a certain number of properties (even as few as five).

Even if they did, who wants to go through the hassle of paying multiple mortgages every month when they could just pay one instead? Talk to any veteran property investor who’s ever made the switch to blanket loans and they’ll tell you it’s worth doing so just for the convenience.

2. Blanket Mortgages Make It Easier to Buy More Properties in the Future

As we just mentioned, early on your path to building a rental property empire, you’ll run into a significant problem: traditional lenders won’t want your business. Even if you have an impressive history of paying back mortgages and no lack of equity, it’s still incredibly unlikely that they’ll offer you an additional mortgage, much less many.

Eventually, a blanket mortgage will most likely become your only option.

The good news is that, going forward, that blanket mortgage will actually help you secure further financing.

That’s because a single loan looks more impressive than multiple loans for the same amount. In other words, showing you’ve handled a loan for $2.4 million will do more for your financing prospects than proof you’ve handled 12 loans for $2 million.

That kind of clout may actually open a couple doors with traditional lenders, but, at the very least, it will help you negotiate much better terms with any lender in the future.

3. Extra Property Can Help Lock in New Deals

As any experienced real estate investor will tell you, there’s almost no such thing as a “perfect” deal. No matter how good a transaction looks on paper, there are usually one or two surprises that need to be dealt with before the deal can be finalized.

This is another way a blanket mortgage can actually help real estate investors add more properties to their portfolios, even when this kind of financing isn’t a part of the equation.

For example, say you only want to purchase one more property. Obviously, it’s always wise to push for the seller to take on some amount of the financing. If they don’t jump at the idea, one way to entice them is by offering to protect their position by offering part of your portfolio as security for the loan. If you already have a blanket loan covering multiple properties, you can use just one mortgage to support a major purchase, even something as big as an apartment complex.

4. A Blanket Loan Is Always Customized

As you may have already learned the hard way, most lenders don’t want to offer loans for multiple properties, much less to someone who already owns multiple properties.

If, somehow, you find a traditional lender who is open to the idea, don’t expect anything other than cookie-cutter options. Their business model revolves around offering only a few types of loans, with very little room for customization. There is very little you can do to change that.

This is one of many reasons traditional lenders usually aren’t an option for real estate investors with ambitious goals. It just doesn’t make sense that someone who wants to buy one home to live in and someone who wants to buy multiple homes to use as rental properties would want the same type of loan. Unfortunately, there are far more homebuyers than rental-property investors out there, so the market is skewed in their favor.

This is why you’re better off going with a blanket loan where customization is the norm. By their very nature, there’s no one-size-fits-all blanket mortgage. They have to be customized for each borrower.

Among other things, this can often mean being able to negotiate a full 30-year term. Even if this isn’t an option, you may still be able to convince the lender to give you a final balloon payment to keep the rest of your monthly payments at a more manageable amount.

Use a Blanket Loan to Build a Better Real Estate Portfolio

If you’re not content with just a single property or two but want to build a robust portfolio instead, you should consider the benefits of blanket mortgages we covered above. While some investors may have been able to create impressive portfolios without them, there’s nothing easy about that approach.

At Rental Home Financing, we’ve developed a blanket loan application process specifically for investors like you. It’s fast. It’s easy. And we’ll tell you if you qualify right away. Don’t put off building your portfolio another day. Get started now.

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About Rental Home Financing:

Rental Home Financing, as the best mortgage lenders we originate rental home loan products and cash out refinance investment property loans as the best investment property refinance lenders. Commercial blanket loans are available with a commercial purpose to suit your needs.

Also, as DSCR loan specialists, we are currently authorized to make such loans in most all areas of the United States. Specific circumstances will determine whether we have the ability approve/close portfolio rental home loans in your state(s). When you are ready to get a mortgage for rental property, we are ready to serve you.

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