Your real estate portfolio is growing, but your acquisitions are creating a annoying hodgepodge of financing solutions from different sources. Over the years, you’ve used hard money, institutional financing and private money as the situation required. But now this is leading to a disorganized spreadsheet of what you owe to who and for how long. And with the added hassle of paying each lender, each with a different payment system, you’ve got your fingers crossed that nothing falls through the cracks.
If this sounds like you, a blanket portfolio loan can offer significant advantages and offer you some pain relief.
What is a Blanket Portfolio Loan?
A blanket portfolio loan is a single mortgage that covers multiple properties owned by the same borrower. Instead of securing individual mortgages for each property, a blanket loan uses all the properties as collateral. Blanket portfolio loans are almost always long-term loans based on the income the properties are generating. You’ll often see them fall under the DSCR loan category. They’re perfect for refinancing multiple single-family rental properties at one time.
Key Advantages of Blanket Portfolio Loans for Rental Properties:
Simplified Management:
- Reduced Administrative Burden. Instead of dealing with multiple lenders, you have a single point of contact and a streamlined loan servicing process.
- Easier Tracking. Managing a single loan is significantly easier than keeping track of numerous individual mortgages with varying terms and interest rates. Get rid of the spreadsheet!
Cost Savings:
- Potentially Lower Interest Rates. Lenders may offer more competitive interest rates on blanket loans due to the reduced risk associated with a larger, diversified portfolio. Our blanket portfolio rates are much better than our hard money rates, for example.
- Reduced Closing Costs: Combining multiple properties into a single loan can result in lower overall closing costs.
Increased Borrowing Power:
- Higher Loan-to-Value (LTV) Ratios. Lenders may be more flexible with LTV ratios on blanket loans, allowing you to borrow more against your combined property values.
- Access to Larger Lines of Credit. Blanket loans can provide access to larger lines of credit, giving you greater flexibility to acquire new properties or make significant improvements to your existing portfolio.
- Manage Shortfall. Blanket portfolio loans can provide financing for rental properties that aren’t pulling in enough income to qualify for DSCR loans on their own. By combining the shortfall property with others that are covering DSCR, a blanket loan can average out the income across all properties.
Conclusion
Blanket portfolio loans can be a powerful tool for real estate investors seeking to simplify their financing, reduce costs, and enhance their cash flow. By carefully considering your specific needs and working with a qualified lender (like us!), you can leverage the benefits of a blanket loan to build a thriving and profitable rental property portfolio.
At Little City Investments, we want to be your go-to lender for your entire real estate portfolio, whether it be the purchase of a single property or a refinance of several rentals. Contact us today to see what options you have for refinancing your real estate portfolio.