Blanket loans

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Blanket loans

Brent Kelley
Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes

Has anybody out there had any success with putting multiple properties under a blanket loan? What were the terms like? Did it affect your cash flow at all? I have 10 properties and am considering getting a loan of this type to free myself up to buy more rentals with conventional financing. Thanks!

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Curt DavisBusiness Member
Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
12y

@Brent Kelley

My partner is in the process of doing a blanket loan and so far so good.  I am also full with loans so I spoke with my conventional lender this morning and asked him if I did the blanket loan can I start getting loans from him again and he stated this which I didnt know; He said I would have to form an S Corp. for the homes I put under the blanket and the loan would have to be with the S Corp and not my personal name.  If you just put homes say take 4 and put under a blanket you have not changed the fact that they are still 4 financed properties regardless if they are under one loan or not.  

Hope that helps, I literally found this out about 1 hour ago!!

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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    12y

    @Brent Kelley

    My partner is in the process of doing a blanket loan and so far so good.  I am also full with loans so I spoke with my conventional lender this morning and asked him if I did the blanket loan can I start getting loans from him again and he stated this which I didnt know; He said I would have to form an S Corp. for the homes I put under the blanket and the loan would have to be with the S Corp and not my personal name.  If you just put homes say take 4 and put under a blanket you have not changed the fact that they are still 4 financed properties regardless if they are under one loan or not.  

    Hope that helps, I literally found this out about 1 hour ago!!

    Curt Davis - KAIZEN Realty538 Reviews
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  • Franklin Romine
    Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
    12y

    @Brent Kelley I hope to sign loan docs on my blanket loan tomorrow aka cross collateralized commercial loan.  It has been a long process, started it back in April.

    Local lender structured a loan that will refinance 13 properties, that had individual mortgages some seller financed. The refinance of existing debt will improve my cashflow by $2,000 per month. Lower total interest rate. The sweet part is they will be giving me a line of credit with the extra equity keeping the total LTV under 65%. So I'm getting cashflow and a line of credit to go shopping with.

    It was a tough decision because now I will have a fixed commercial loan for 5 years.  Some of my mortgages would be paid off in 10 years.  I felt the loss opportunity of cashflow and using the equity to buy more assets was much more valuable.  It is where I'm at being early 30's.  If I was early 60's I probably wouldn't have done it.


    Frank

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  • Brent Kelley
    OP
    Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes
    12y

    Thanks for all the info guys. 

    Curt, I actually had heard something similar with regard to the blanket loan. I heard you could put them in an LLC.

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  • Brandon SturgillBusiness Member
    Real Estate Broker · Columbus, OH · Member since 2013 · 3k+ posts · 1k+ votes
    12y

    I use a portfolio lender to leverage my primary residence as collateral against the purchase of an investment property...but my lender only permits two properties under the blanket. So, this is more of a fix-and-flip model (I have a full-time W2 job)...

    My terms are a combined 80% LTV on primary residence and 75% LTV (purchase price) on investment with the option of a add-on rehab loan that works on a draw schedule. The construction period is interest only for 6 months. And the required payment toward principal needs to maintain my primary residence at 80% of appraised value. I'd be glad to share more details on this if you're interested. Best of luck.

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  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    12y

    The blanket loan is like the magical unicorn in finance for an investor. Its almost impossible to find and even harder to catch. 

    I hit one a few years where they rolled 3 properties into one loan. And then that bank got audited about 2 years later and had to stop ALL investment property loans. 

    I've tried numerous times over there years and have come real close a couple times. But every time it just seemed to be an effort in futility. The two closest got all the way to the final committe review.
    1) One said no - properties were too far away from their bank.
    Hello. The properties were the same distance away when I started the loan. Why didn't you tell me back then that you couldn't do that distance and saved me the time.

    2) Last one said no - They had just cleared off the last of their bad investment property loans. They decided they just didn't want to get back into these again.
    Hello. Then why put me through 2 months of gathering paperwork and paying
    for appraisals?

    What I will say is that this new B2R Finance place is definitely doing blanket loans. Their financial terms aren't bad in terms of amortization period and interest rate (although the rate is still higher than most portfolio lenders).

    The one thing I don't like is all the tentacles they want to put into your properties.

    You have to create a new LLC and put all the properties that will be covered by that loan into that LLC. This is a KEY issue with their loan product as fannie mae's recent change now states that anything in an LLC will still count against your limit of 10.

    So they definitely seem to be missing the boat on what their product actually should look like. But at least they actually seem to have a product they can close with. And the fact that they amortize over 30 years (most portfolio lenders are 20) is a bit of a boost to profits.

    Maybe the local lenders by your are a little more open to blanket loans. But the ones here by me just don't like doing their portfolio loans in bundles. They want ease of management (i.e. house by house) so they don't have to deal with issues when selling homes out of the bundle.

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  • Brent Kelley
    OP
    Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes
    12y

    Thanks Mike. Sounds like a mess! Maybe I'm not understanding but if fannie is counting everything in your LLC toward your 10, then what is the point of all this? Is it the fact that you will now have 1 loan instead of 10... opening the door for 9 more? Thanks.

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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    12y

    Brent, having the LLC won't allow you to free up more mortgage spots. That's why you have to form am S Corp and get the blanket loan on your S Corp, then you will open up the mortgage spots. Hope that clarifies.

    Curt Davis - KAIZEN Realty538 Reviews
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  • Brent Kelley
    OP
    Investor · Rancho Santa Margarita, CA · Member since 2014 · 24 posts · 5 votes
    12y

    Gotcha. That makes sense!

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