Blanket Loans

by : Brandt Stohr

Great news for Real Estate investors with too many properties to obtain traditional financing.

This question has been asked so many times. I get asked "why can't I consolidate all my loans under one blanket loan".

Until just recently my answer has always been "sorry, can't do it". We have been looking for this loan for years. The problem is that it is more than 4 units which makes it commercial, but the properties are all residential, individually deeded which commercial guys can't touch or sell.

This is further complicated by the fact that the investor wants releases which would allow him to sell off a property if he gets a good price and the lender releases that property from the security - which again, no one wants to do.

Now there is a loan for investors for multiple residential properties (5 or more) where the total loan size is between $500,000 and $5,000,000. fractured condos are also allowed!

With this new loan in place the seasoned investor with ten rental properties can consolidate into one loan for all the properties and not have the loans under their name, which frees them up to buy more properties!

Investors also can get the added protection of an LLC, which gives the investor less liability.

Put all the investment properties into one loan. Now these properties can all be financed under one loan and put under an LLC, allowing the investor to obtain more traditional financing on their other investments.

Now here are the parameters: the investment properties MUST cash flow at 1.2 times. LTV's are 75%. Cash out is available but again, they must cash flow. Releases will be granted after the 3rd year. Credit score is not critical like stated but the credit can't be bad. Tax Returns don't need to show income because qualifying is totally based on property cash flow. This is a full doc deal. Now here is the really good news rates on this blanket loan right now are very good, around 7.125% fixed.

Remember, many Real Estate investors are paying hard money rates of 12 to 14% on some Real Estate deals, simply because they have too many properties. Now they can finance all of the properties on one large loan under an LLC and have their personal credit clean to obtain the best available financing for future purchases.

The other benefit is income, several real estate investors use cash out of their investment properties as their main source of income. This is a great way to go from a tax stand point, because they don't pay tax on borrowed money, however; from a lending stand point they don't show much in the way of income. With this type of loan the income from the properties is what qualifies them for the loan, not their personal income.