Portfolio & Blanket Loans

Portfolio loans, also known as blanket loans, are real estate loans that allow investors to finance multiple properties under one loan. They are an excellent way to reduce transactional costs and interest rates, buy entire portfolios, and improve an investor’s lifestyle by having one easy monthly payment.

Factors that Differentiate Blanket or Portfolio Loans

There are many factors that differentiate blanket or portfolio loans. Here are a few:

1. Product Type:

Many lenders allow both purchase and refinance transactions, but you can usually only use one or the other. In other words, you cannot use the same transaction to purchase some homes and refinance others.

2. Fixed, Arms and Balloons:

Fixed-rate mortgages have the same interest rate for the entire time. If you have a long investment horizon, this is often the best choice.

Arms are adjustable-rate mortgages. The rate will be fixed for a certain time frame then the rate will adjust based on some benchmark, such as LIBOR or Prime rates. If you have a shorter investment horizon or plan on selling or refinancing in a shorter time frame, this can be a strong option if the lower payment is worthy of the additional interest rate risk.

Balloons are the riskiest option as they must be refinanced in a shorter time frame, but have a longer amortization, allowing for a lower payment. Many portfolio loans are balloon loans. This product is often most viable when you are confident you plan on selling the group of properties by a date well in advance of the balloon date.

3. Release provisions or release clause:

It is important for you to know how payoffs of individual properties will be handled. Some lenders do not allow the sale of individual properties.  Some lenders will let you receive 100% credit for any properties which are paid off while others may have less favorable provisions. Recasting the payment is an option with some lenders, which allows you to remove a property and have the payment lowered based on the new, lower loan amount.

4. Cross-Collateralization:

Allows cross-collateralization of different product types (single-family, townhomes, condos, and some multi-family) and properties in different states.

Positive characteristics of blanket loans:

1. One easy Payment with one lender.
       A) Easier tracking and bookkeeping.
2. An unlimited number of properties you can purchase.
3. Excellent pricing and much lower closing costs.
       B) One closing, one title policy, one doc set, etc. all result in thousands of dollars of savings.
4. Ability to borrow in an entity, such as an LLC.
      C) Owning assets in an LLC provides additional protection for personal assets.

Make the Investment Today!

Now that you know more about buying and holding, are you ready to invest? Then partner with Catalyst Funding. Contact us today or fill out a loan application. We’ll help you develop a plan and provide the financing you need to achieve your goals and accelerate your cash flow.