If you’re juggling multiple real estate deals and drowning in paperwork, a blanket loan could be the financing shortcut you need. It lets you buy multiple properties with a single loan!
At ABL, we specialize in helping real estate investors get deals off the ground with fast, flexible funding you can rely on. Whether you have multiple construction projects going on at once or you want to acquire several turn-key rentals, our blanket loans can simplify the process.
What Is a Blanket Loan?
A blanket loan is a single mortgage that covers multiple properties. It’s an attractive alternative to getting multiple loans since it gives you just one monthly payment to worry about and you can spread closing costs over many properties. As a real estate investor, this is the kind of move that can help you scale your portfolio faster.
How a Blanket Loan Works
When you take out a blanket loan, you are using multiple properties as collateral. That means if you default on the loan, the lender could seize any or all of the properties to recoup their losses.
Most blanket loans also include a release clause that lets you sell some of the properties without triggering a refinance of the others. This gives you the flexibility to offload parts of your portfolio as you want.
For lenders like ABL, financing multiple properties with one loan can help diversify risk. It lets us extend credit across multiple investments instead of putting all our eggs in one basket. For borrowers, blanket loans reduce the amount of paperwork and closing costs per property.
When to Get a Blanket Loan
Blanket loans are ideal for when you want to buy or refinance three or more properties simultaneously. These could be distressed homes you plan to renovate, turnkey rentals you want to add to your portfolio, or vacant land parcels to build on. However, before you get a blanket loan, you must make sure you meet the minimum loan requirements.
Typical Blanket Loan Requirements
Blanket loan requirements vary by lender, but here’s what to expect:
- Credit score. Most lenders have a minimum credit score requirement. At ABL, it’s 660.
- Number of properties. The number of properties you can cover with a blanket loan varies by lender. ABL loans can cover up to 10 properties at a time.
- Loan size. Expect a minimum and maximum loan amount. At ABL, we offer loans of anywhere from $75K to $50M.
- Property types. Not every property type can be financed. ABL loans can finance single-family, multifamily, and condo properties.
- Loan-to-value (LTV). LTV requirements limit the loan size based on the property’s value. At ABL, we’ll finance up to 70% of a blanket loan portfolio’s after-repair value (ARV).
- Experience. Some lenders require borrowers to have investment experience. ABL offers loans to investors of all experience levels (though blanket loans that involve new construction require building experience).
Typical Blanket Loan Terms
On top of meeting the lender’s loan requirements, you must agree to their loan terms:
- Interest rate. Interest rates fluctuate with the market. However, some lenders offer better rates than others. At ABL, you can get rates as low as 8%.
- Origination fees. Origination fees (aka points) are one-time fees lenders charge to process your loan. For example, ABL offers loans with 0-2% points.
- Loan structure. How a blanket loan is structured can vary widely. At ABL, we offer interest-only payment options as well as traditional fixed loan terms.
- Release clause. A release clause lets you sell some of the properties covered by the blanket loan without needing to refinance the others.
- Prepayment penalty. Some lenders charge a prepayment penalty if you pay the loan off early. At ABL, however, we don’t. We believe you should keep the interest savings.
- Personal guarantee. Many lenders, like ABL, require that you personally guarantee the blanket loan if your business defaults on it.
How to Get a Blanket Loan
If you’re ready to get a blanket loan, follow these steps:
1. Prepare Your Portfolio
Start by listing all the properties you want to finance under the blanket loan. Write up a business plan for each one and explain how long you intend to hold each one. Don’t forget to include clear exit strategies.
2. Compare Lenders
Look for lenders who have experience with blanket financing. Then compare their loan requirements and terms by getting pre-qualified by each. At ABL, you can pre-qualify for a blanket loan within 24 hours.
3. Submit Loan Application
Once you’ve settled on a lender, submit a full blanket loan application. This requires filling out an application form and sharing property details, business plans and budgets, and other financial documents. Review the lender’s loan application requirements to learn more.
4. Go Through Underwriting
Once they’ve received your application, the lender will start the underwriting process. This includes reviewing your creditworthiness, your investment experience, and the deal details. It also involves completing property inspections and appraisals to verify the value of the collateral.
5. Close and Collect Funds
At the closing table, you’ll sign legal documents to officially purchase each property and take out the blanket loan. From there, the lender will disburse the loan funds as a lump sum or in installments according to agreed-upon construction milestones for each property.
Get a Blanket Loan From ABL
Ultimately, blanket loans are a powerful tool to streamline property financing, reduce closing costs, and scale your real estate portfolio more efficiently. By consolidating multiple property purchases under one loan, you gain more flexibility and control.
At ABL, we make getting a blanket loan simple and fast. Whether you’re growing a rental empire or flipping multiple properties at once, our team is here to help you get blanket funding quickly. Take the next step on your investment journey, by contacting our blanket loan experts today.