While people not involved in the real estate business may never have heard of blanket loans, it’s a term well known among real estate professionals, the practice having been around for several decades. As the name suggests, blanket loans come into play in real estate transactions which involve multiple properties in a single loan.
One good example would be a new subdivision of homes, where financing must be arranged for a large number of houses. Having to do this for every single house would amount to a paperwork horror story, but managing it in one large mortgage loan makes the whole process much more efficient and less costly. It is also used in other contexts in the real estate industry, such as when blanket loans are provided to investors for the purpose of refinancing, remodeling, or expansion of entire portfolios of single-family rental properties.
When blanket loans are most beneficial
There are several specific instances when it can be highly advantageous for investors to apply for blanket loans, especially those investors having at least five rental properties or more. Money from a blanket loan can be used to refinance and make desirable improvements, as well as to take advantage of reduced interest rates which may be offered.
In other situations, blanket loans can be used to acquire additional properties whenever market prices make it beneficial to do so. Buy-to-rent loans are often set up for the specific purse purpose of purchasing a number of single-family homes, and then immediately renting them out, which provides security and certainty to the lender.
How to find a lender
It’s very important to find a lender who has had prior experience with arranging blanket loans, since that indicates a willingness to provide funding for single-family homes. Next, it’s a good idea to research a lender’s amortization schedules to find someone who offers lower payments, so that your cash flow can be maintained. It will also be advantageous if you can find a lender who allows for title holding, since that reduces your liability and maintains privacy. You should also check on any partial-release possibilities, in case you should want to sell individual units down the road.
Liberty Commercial Capital offers custom tailored blanket loans to meed the size and scope of your next real estate endeavor. Contact us to learn more today!