Opinions on Blanket Mortgages

[Dulce Davis]

I hear that it's hard to find someone in Texas who will do blanket mortgages. Another lender who is also an investor, says its really not allowed in our area but she knows it happens. What are y'alls opinions on blanket mortgages?

I have 5 SFRs so far. Four mortgages have a balance around $90-100K, with values ranging $135-165. One property has no mortgage. I'm wondering if it would be an option in my situation to do a blanket loan for scaling. Or, just keep going as I am, doing delayed lending to cash out after I make repairs and get a tenant in them. Pros vs cons?

[Doug Smith]

I'm not a fan. Just this morning I was working on a modification of a blanket construction deal where the borrower is building 3 new construction single family homes. There was an issue with one of the three projects and it has been delayed a few months. We're solving the issue, but the blanket does complicate it. Just make sure you get a "Partial Release Clause" where the amount you have to pay down on the loan is prescribed up front when you sell a property in the blanket. That's the big issue I usually see with them. They are do-able, but individual deals are usually easier on the exit.