Portfolio/Blanket Financing vs Conventional Loans for BRRRR

4 Replies

Hello BP,

I am looking to acquire a fairly sizable portfolio this year, I am wondering which strategy has worked well for seasoned investors in the past. I recently got the nod from my lender to do immediate delayed financing on properties where I purchase with cash and refi out before 6 months but after chatting with a few more members on bigger-pockets I am curious if this is the best route. Let's say if I bought 10 houses all cash is it better to use delayed financing on each one individually or should I do a portfolio/blanket loan? Thanks for your feedback and help! 

@Bryan Pham I would ask yourself what your likely exit strategy is going to be on these properties. 

I exclusively use portfolio loans and they have been instrumental to my growth. However, there is definitely a downside to them. My small, local banks require that I keep the LTV the same on the entirety of the portfolio loan when selling off a property. This is a huge deterrent to selling properties because there is usually little cash left to show for it if they don't allow you to take all of the proceeds.

I love portfolio lending for growth but not for disposition. 

Originally posted by @Will Gaston :

@Bryan Pham I would ask yourself what your likely exit strategy is going to be on these properties. 

I exclusively use portfolio loans and they have been instrumental to my growth. However, there is definitely a downside to them. My small, local banks require that I keep the LTV the same on the entirety of the portfolio loan when selling off a property. This is a huge deterrent to selling properties because there is usually little cash left to show for it if they don't allow you to take all of the proceeds.

I love portfolio lending for growth but not for disposition. 

 Hi Will,

I am looking to hold onto the properties as long as I could for cash flow but when the opportunity comes to upgrade into large apartment complex I planned on selling these assets. 

Dang that's a huge bummer for disposition, have you had experience cash out refinancing your properties through your portfolio loan? Would they only lend on 75% LTV?

@Bryan Pham yes I have done portfolio 80% cash outs with a local lender in South Carolina. These were all SFHs and duplexes but they required appraisals on each one. Portfolio cash outs were pretty hard to find in my experience but can certainly be done depending on balance sheets, PFS, etc.

I don't see blanket loans very often anymore. Your best bet would be to roll all 10 properties into a commercial loan and then start all over again with personal financing. Most lenders tap out at 7-10 investment properties.