"Blanket loans" for SFR buy/hold'ers?

Question

Along the same lines-- we're facing the same Fan/Fred limits...does anyone have any thoughts on how we might either roll our current mortgages up into one loan, or, how we might get a larger, fixed term, fixed rate loan, say $250K to buy 4-5 properties at one time?  The onesy-twosy lending process is killing us with fees, particularly when the loans are just $60-70K.

Bill Gulley · Answer

And when you use blanket financing make sure you have a stated payoff for each property usually worked out as a loan to value from the beginning loan amount to the outstanding balance at the time of any payoff, on a per property basis. Such a release fee is necessary otherwise you may be required to pay more than is allocated to release a property.

Brian Levredge · Answer

@Laura. To expand a little more on what Nathan said, approach local small lenders.  If you have a local REIA you may want to to go there and see if other members have anyone they can recommend that is investor friendly.  Put together a proposal and a resume which will let them know a little about you (in addition to looking professional) and what your intent is.  You will more than likely have to shake a bunch of trees however.

Something else to think about is private lenders.  These are a little more difficult to find and the money typically costs more.  The trade off of course is that sometimes you can find some pretty sweet deals from people who are looking for a safe place to park their money and beat what they can get at the banks.

Nathan Emmert · Answer

My suggestion is to pick up the phone and let your fingers wander.  Seriously, you need to start making lots of phone calls.  Do a google search for banks and credit unions in your area, look for smaller ones with only a few branches.  Call them, ask them some questions, see how open they are to working with investors, schedule an appointment to meet with them, to show them your business plan.  There are lots of options out there but you're going to have to put in the effort and every city/county/state will have different players.  I recently found a credit union in the county I buy in which is allowing me to do 100% financing with the seller carrying the 30% downpayment.  Sweet gig :)

Brian Levredge · Answer

Sometimes blanket loans are not much of a solution and can cause you more problems in the long run than they solve, depending on what your strategy is.  If you plan to dispose of properties over time, you may have issues with a blanket lender as often times they want a minimum overall loan amount as well as min. values per property.  In addition, you could be looking at fees every time the loan recasts due to selling a property.  Six one way, half a dozen the other.

Probably your best bet for sake of ease is to develop a relationship with a portfolio lender that won't have you capped.  A large LOC would give you the flexbility you are looking for although you will need to refi out of it eventually.  When you are dealing with a bank of any type, there are always going to be fees and transaction costs (some of which can be negotiated) so I don't think you are going to be able to eliminate that, especially since you are dealing with SFDs.

Jon Klaus · Answer

Another option is to get away from more SFRs when your conventional bullets are spent.  Like residential?   Multi-family with commercial loans.  Or office, retail, warehouse, industrial, mixed use, triple net, mini storage, special purpose, assisted living centers, etc.

Steve L. · Answer

LOC = Line of Credit

I have the same problem and no good solution. From my conversation I think if banks see 2+ years of taxes and strong performance a line of credit is possible (60% LTV).  Be ready to pay for a ton of appraisals and don't expect long-term fixed rates.

Sandeep S. · Answer

David J.

I am investing in Houston.  I am working with agent(s) and PM(s).  While turn-key will be much easier - that is just not interesting enough!  I focus only on REO and short-sales.  I closed on my first acquisition last week in Spring!  I am in contract for the 2nd one in Baytown (closing in 2 weeks).  My plan is to buy 5-7 properties this year and then finance the whole portfolio in a commercial/blanket loan.  I plan to hold them for a long time (I don't enjoy selling part :)

Which areas do you invest in?  And how do you finance?  I have no commercial financing experience yet.  But given that conventional lending process is so horrible - I am looking forward to the world of commercial lending!

Sandeep S. · Answer

Hi @Laura R. - it is an older topic but very relevant for me now :)  I am also in silicon valley and have reached the 10 loan limit (that you reached in 2012).  I am hoping you have found some solution to the blanket loan problem that you can share :)

Interestingly - I have also just started invested in Texas....

I would love to hear from you if you found any local lenders or lender from Texas..

Laura R. · Answer

Bill -- 
Thanks for calling out some of those "gotchas" on the blanket loan.  That was really helpful!

"Blanket loans" for SFR buy/hold'ers?

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