Investing in property requires a significant amount of capital — or easy access to credit — but sometimes you might need multiple loans to cover more robust properties. Blanket mortgages are one tool you can use to finance a property that has a higher value than one loan might cover.
Blanket mortgages allow investors to purchase properties that might otherwise be unattainable, but they’re not for everyone. Before you decide to take this path, review this blog to find out if blanket loans are the right decision for your situation.
Blanket mortgages sound like loans you take for that really expensive ReST bed you had your eye on. Even real estate professionals aren’t always aware they exist. These multi-property liens are often confused with products like wraparound mortgages. But a wraparound mortgage is just a fancy second lien, whereas a blanket mortgage is a first lien.
Not only are blanket mortgages easier to deal with than those other complicated loans, but they’re typically offered only by specialized companies. This is because traditional banks don’t have the capacity to train staff on how to help professionals who own multiple properties.
It’s easy to start an LLC. Pick a name, choose a registered agent, and file articles of incorporation with your state. This step is always mentioned as a way to protect your investments. But an LLC is more than that.
Businesses are known for generating profits in an efficient manner. You don’t get to the size of a company like Walmart without a lean, mean operating machine. In fact, Walmart is a business you should be emulating with your own investment. Walmart is more than a retail giant - it’s a master at blanket loans.
The internet makes it easier than ever to find lenders, check cashing, and other financial services. And we’re no longer stuck using the same handful of lenders our parents did. Today’s financial market is filled with reputable blanket loan lenders and other financial institutions that understand the challenges of a changing market.
You can’t afford to wait five or ten years to get started with a portfolio of investment properties. Research shows rents are rising in major cities like Phoenix, AZ and Las Vegas, NV. Millennial homeownership in the gig economy is nearly 10 percentage points lower than in previous generations.
You weighed the pros and cons of blanket loans carefully. It’s the right option for you, but you’re not sure who you can trust in the industry. Who can blame you?
Traditional mortgage lenders aren’t equipped to handle some of the more creative and advanced investment strategies. Your loan servicer is an expert in first-lien mortgages for single-family dwellings. The vast majority of loans she’s closing are government-backed FHA and VA loans.
Outliers she deals with are 2nd mortgages, reverse mortgages, and home equity lines of credit (HELOC). That’s about the extent of your current loan servicer’s knowledge, and beyond that, you’re stuck dealing with a commercial real estate agent.
When it comes to rental property investment, growth is key to success on a large scale as a real estate investor. One of the chief concerns among investors new to real-estate is how to finance multiple rental properties. There are a variety of options available to you as an investor interested in more than one rental property.
Why You Should Finance Multiple Rental Properties
There are plenty of reasons why you should be financing, not one, not nine, but over 10 rental properties at a time.
While you can make a tidy profit as an individual investor on a single rental property, the key to success is growth. Whether you’re on your own or part of a larger real-estate investment group, you can compound profits and drive growth by financing multiple properties.
Portfolio mortgages are loans that are kept on the books instead of being sold. The significance of this to borrowers is that by not being sold on the secondary market, originating lenders can draft more flexible criteria for qualification. By relaxing qualification requirements, you can get access to money that would be denied to you elsewhere.
The Rundown on Portfolio Mortgages
Portfolio mortgages are held in the lender’s investment portfolio and are not sold on the secondary market. As such, they are not subject to the much more stringent terms that you’ll encounter with conventional lenders like banks. By not being held to the same standards, lenders that work with portfolio mortgages can make it easy for you to qualify.
Triplex - 3 Unit Mortgages for Investors - Stated Income Financing with No Tax Returns
If you’re in the market for portfolio mortgage financing, it goes without saying that you’re an investor who is serious about growing their holdings in the near future.
Still, it’s important that you consider all of your potential options. After all, your portfolio is only as good as the properties that make it up.
That’s why you should seriously consider the advantages of making your next purchase a triplex.
A triplex is exactly like a duplex, except it involves one additional unit. So, a triplex is one property, made up of three separate units that all share at least two common walls between them. Sometimes, they might share a garage or some other space instead. Each unit is completely self-sufficient, though, meaning it has its own living space, bathroom, kitchen, and door to the outside.
Successfully investing in rental properties requires more than just knowing which ones to pick.
One of the most important aspects for long-term success is simply knowing how to find the financing you need to make your acquisitions. Rental Home Financing wants to be your lending partner!
If you’re focused on acquiring single-family homes, your best option is almost always going to be nontraditional lenders offering portfolio mortgage financing.
A portfolio mortgage lender, like Rental Home Financing, uses its own cash and often credit facilities to leverage money for the purpose of originating, underwriting, and closing several types of products related to the purchasing of residential properties.
One of the most important aspects of success in real estate investing is understanding how to properly finance your portfolio.
Countless investors skip this step, though.
They may eventually build what appears to be an impressive portfolio of a dozen or more properties, but because they didn’t finance it correctly, it hardly provides a full-time income.
So, while success requires mastering a number of different areas, creating a robust portfolio of rental properties will be much easier if you understand how to make the most of investor financing.
Nothing can compare to a large portfolio of rental properties in terms of securing your financial future.
The benefits of owning just a single rental property are significant. Owning multiple homes means greater cashflow, equity, opportunities for diversity, and, of course, a large payout if/when you decide to sell.
Of course, before you can enjoy all of these attractive benefits, you need to actually finance such a portfolio. For the first couple of properties, your local lender may be an option.
However, to build out the kind of portfolio that becomes your main – or even sole – source of income, you can’t do better than a blanket loan.
Nothing quite compares to how it felt when you closed on your first rental property.
It was a brand-new experience, maybe even one you weren’t sure you’d see all the way through.
But you did and, pretty soon, that investment began paying you back as rent checks came in every month.
If you’re like most investors, it didn’t take you long to start thinking about going through the process all over again and purchasing another rental property. After that, it probably felt inevitable that you’d soon purchase one more.
At this point, you may be seriously considering turning real estate into the source of your full-time income. You might even be just one or two properties away from replacing your current salary. Then, why not just keep adding more to your portfolio?
This is usually when investors begin asking, “How many mortgages can you have?”
The answer may surprise you.
Since its inception back in 2008, Airbnb has changed the way people find places to stay when they travel. The days when hotels and motels were the only two options are long gone.
Airbnb has made it so that anyone who owns a home can make a nice little side income – or even a fulltime income – by renting it out to others.
If you’d like to get in on the action but don’t want to use your current residence, one option is to use an Airbnb loan to purchase a rental property.
There is actually no such thing as an official “Airbnb loan.” The home-renting giant remains content in their field and hasn’t shown any signs of wanting to branch out into offering mortgages, too.
If you’re an advanced real estate investor whose goal is to create a robust portfolio, it’s almost impossible that you haven’t heard of blanket mortgages before.
They’ve become one of the most popular forms of funding for serious investors with growing portfolios. Still, that doesn’t mean they’re always the right choice for everyone.
So, before you take out a blanket loan, it’s worth taking a few minutes to consider both the pros and the cons associated with this type of unique mortgage.
There are a number of benefits that go along with being a real estate investor, not the least of which is high returns delivered on a consistent basis.
However, that’s not to say that investing in real estate isn’t without its challenges.
One of the most common with which investors struggle has to do with financing. Getting the best possible rates is obviously important, but so is picking the right type of loan. The wrong choice could turn an otherwise promising investment into one that falls short of its potential.
This is why the blanket mortgage has become such a popular choice among experienced investors.
At some point, every real estate investor ends up asking the same question.
It usually comes after they’ve purchased three or four properties and are really beginning to see the potential for a much larger portfolio, provided they can find the financing for it.
At this point, they begin to wonder, “just how many mortgages can I have?”
If your real estate portfolio is coming along and you don’t want to stifle its growth, then finding out how many mortgages you can have is the natural next step.
Building a portfolio of multiple rental properties is almost always a challenge – albeit a rewarding one.
To be successful, you must cultivate an eye for finding the best possible opportunities and then securing them at the lowest price. Of course, that’s just the beginning. After purchasing a property, you then need to go through the process of renting it out and managing the investment year after year.
Nonetheless, for many investors, the biggest challenge remains securing a loan to begin with. Unfortunately, the more properties you add to your portfolio, the harder this tends to be. Many investors have to pass up otherwise amazing opportunities because their current portfolio would make it impossible to add another home.
The good news is that there is a solution: No-Ratio Loans for Investment Properties.
Are you an experienced real estate investor who wants to grow their portfolio by more than just a single property?
If so, you should know about one of the best lending solutions for that kind of venture.
With a blanket loan, you can secure numerous properties at once without the same inconvenience and overhead associated with multiple mortgages. Blanket loans offer a number of other unique advantages, as well.
When most people think about taking out a loan to purchase a property, they imagine a residential or commercial mortgage. This has been the standard for decades.
Yet, while this has become the most popular version for buying a property, investors often want to buy more than one at the same time. For example, many developers want to buy tracks of land all at once. Real estate investors often find multiple buildings for sale in the same area that they’d like to purchase at the same time.
In these situations, those parties could take out multiple mortgages – one for each property they wish to purchase – but, as many investors and developers have had to learn the hard way, that usually makes for a very cumbersome arrangement – to say nothing about how much money it wastes (more on that in a minute).
Instead, an experienced investor will almost always opt for a blanket loan. As the name suggests, a blanket loan covers multiple properties, allowing an investor to buy, hold, and sell each of them under the same financial agreement.
The investor also enjoys the convenience of making this arrangement through a single lender, instead of having to go through the process with many of them. This means they only need to concern themselves with one payment for one loan – ever.
These business-purpose loans almost always come from non-bank lenders. Generally, a blanket loan is used for buying between one and four properties. These can include:
However, they can be used to purchase many, many more.
Why the single-family home rental market is trending up, up, up
Single-family-home rentals are on the rise and all signs point to continued growth and opportunities for investors to cash in on the trend. Millennials opting to rent vs. buy are creating a demand for rental homes across the nation and expanding a market that has seen steady growth in recent years.
One reason could be a lack of inventory. According to Time MONEY, single-family home construction still hasn’t recovered from cutbacks, following the financial crisis. Potential buyers are finding housing shortages in cities like Nashville, Raleigh and Kansas City, where low inventory hasn’t historically been an issue.
Stricter credit requirements have also come into play. The loose lending practices during the last housing boom left nearly 8 million homeowners in foreclosure. What resulted was a financial reform law with new, firmer rules for lending.
What is better; single family home investing or multifamily apartments?
There are passionate advocates for both of these types of rental property investments. How do they really stack up? Which is the smarter move?
There are some investors who are very bullish about multifamily apartment buildings, and argue that they have traditionally offered some advantages in the real estate investment space. Let’s look at both the pros and cons.
Rental property growth rate data shows it may be a great time to both restructure and ramp up investment portfolios. Here are the stats, quirks, and opportunities rental property investors should be watching now…
Rental rates began slowing in 2016 according to CoreLogic. They experienced a massive surge in the wake of 2008, and marched upward at an amazing pace for several years back to back. Then credit slowly began to become more accessible to home buyers, while new multifamily construction took off. That construction and completions is believed to have peaked in 2017. Some softness may be patched up by tight inventory, a stronger national economy, and the absorption of new apartment units. Analysts believe that overall, the US should see continued modest gains in rental property growth rates, though trends will be localized.
What does the huge Equifax credit hack mean for rental property investors?
The supersized hack of credit bureau data could have a substantial impact on real estate, the economy, millions of individuals, and rental property investing. Here’s what rental home investors need to know…
With the massive data breach at Equifax potentially impacting close to 300M Americans, plus Canadians and the British, there are likely to be many renters and would be home buyers affected over the months and years to come. Some of those who hoped to buy homes will no longer qualify for traditional home loans. The renter pool could see a significant dip in average credit quality due to ID theft and fake accounts being taken out in consumers’ names.Rental property investors should be anticipating this. If the damage really begins to stack up, landlords may have to lower their approval criteria, and dig deeper into credit. Check if this is an applicant who has maintained good credit until recently, and may be a real hacking victim. In which case their rent to income ratios may also be far better in reality than their reports show
Housing inventory shortages have been a hot issue over the last 18 months. Where is this crisis at its worst? What opportunities does it present for investors?
Realtors have been continually stressed about the shortage of housing inventory over the last couple of years. This may bring both advantages and disadvantages for some real estate investors. So, just how tight is the market? What is causing the drought in supply? Where are the opportunities?
The days of America being a massive buffet of homes capable of filling the appetite of every individual and global fund have certainly changed a little in the last ten years, according to the media. In January 2017, economist Jonathan Smoke said two thirds of the US housing market is seeing less inventory, with tight credit and limited construction remaining factors in this change.
How can income property investors protect their portfolios from hurricane risks?
Natural disasters, and hurricanes in particular appear to be imposing increasing threats to real estate investors. Storm seasons appear to be more active, wildfires have grown worse, and direct hits to residential areas feel like they are larger and more expensive than ever. What can rental home and multifamily property investors do to be better prepared to weather these conditions, and bounce back quickly?
Natural disasters like hurricanes bring a multitude of broad and long risks for income property investors.
Just how bad is the impact of hurricane Harvey on the Houston housing market? What will it mean for real estate investors? What does the potential for recovery look like?
At least tens of thousands of Houston housing units have been impacted by Harvey. Some estimates put this damage at around $400B. That’s around 4x the cost of Katrina. Add to this the loss and damage to other commercial properties, and interruption of business, and the impact over the next few years could come close to $1T.
Where are the best places to invest in rental homes now?
Home prices are up and rental yields have been squeezed in some areas. So, where are the best markets for rental property investors to acquire new income producing assets now?
According to The Street, these are 10 of the best markets for rental property yields in 2017:
Yield maintenance can be a new and unfamiliar term to newer real estate investors. What is it? How does it work?
Essentially, yield maintenance helps ensure the lender and their investors achieve a minimum yield on the loans they make. They need to ensure they stay profitable, and deliver on their guarantees to others.
Yield maintenance typically shows up as a prepayment premium or penalty in mortgage loan documents.This is a standard feature in many commercial real estate loans. How much it is can depend on a combination of interest rate, points, pre-payment penalties, and interest rate trends.
There are no absolute rules when it comes to applying this factor. Each lender can apply their own calculations, and desired minimum yield.
Cash flow real estate continues to grow in popularity with individual and Wall Street level investors alike. What’s the big draw to, and advantages of this asset class?
There are many reasons cash flow properties are an attractive investment. Here are seven of those drivers to consider when looking for new investments.
The cash flow itself is one of the biggest draws to both individuals and institutional investors. Cash flow is critical for keeping any business or investment going long term. The lack of it is the primary reason people, businesses, and institutions go bankrupt. Not only do rental homes and commercial properties produce cash flow, but they deliver passive income as well. This is a major advantage, even over flipping houses or new construction.
No DSCR and DSCR based loans offer different advantages to investors, depending on their status and the type of property they are acquiring.
DSCR stands for Debt Service Coverage Ratio, which is a fancy way of saying, "is there enough cash flow from the monthly rent to cover the mortgage payment, insurance and taxes?"
When you use a DSCR loan product, you are choosing a loan driven by the ratio of monthly rent to mortgage payment, taxes and insurance. This ratio will drive the size of the loan and the pricing.
Real estate investors often run into issues with financing properties once they hit about 10. Having more than 10 mortgages isn't allowed by many lenders. Some won’t loan to borrowers who have as few as 4 mortgage loans on their credit. So, how are you supposed to build your empire to 20, 30 or even 100 properties?
There are a few ways you can find the financing you need, when you have more than 10 rental properties. Since most lenders will stop loaning you money after you have 4 to 10 mortgages showing up on your credit report, you need to know where to turn, in advance. Here are a few ways to finance more than 10 properties as an investor.
A blanket mortgage allows you to finance an entire portfolio of rental properties, without limits. Builders and developers often use these types of loans along with commercial property investors. When you need to fund more than one property, you can use a blanket loan, which will act as one loan with a single servicer. This not only helps you to finance more than ten properties, but also helps to cut down on the paperwork of managing payments each month.
Stated income loans could provide the liquidity and confidence needed to fuel an extended surge in the US property market.
Home sales are up, the economy is looking up, and demand for real estate is growing. However, it could be stated income loans which finally offer the fuel needed to get investors more active, and provide the new round of growth analysts have been watching for.
New data from the National Association of Home Builders shows US home builder confidence hitting yet another new high in March 2017. It is now at its highest level since June 2005. CBRE’s new Global Investor Survey also shows $1.7T in capital is waiting to be deployed into property markets this year, with North America being the preferred destination. This could be compounded further with Eric Trump’s recent revelation that his organization is planning to halt developing projects overseas, in favor of more domestic investment.
There are a lot of investment options out there. Why are savvy and experienced investors still trending towards investing in single family homes? What are the benefits?
The need for passive income far outweighs simple returns or potential for asset growth. Single family homes are true workhorses for churning out cash flow and passive income month after month. With good property management investor-landlords can put their portfolios on autopilot and just let the returns flow in.
New No Ratio Loans offer real estate investors simplified financing options for taking advantage of the current market, fast.
This is expected to be another record year for the US real estate market. In order to take full advantage of the opportunities investors need leverage. Interest rates may still be low, but many investors have been holding back due to fears of the hassles of applying for financing. Fortunately, a variety of new lending products are available in 2018, including streamlined loans with limited documentation requirements.
Availability of rental home financing continues to give real estate investors an edge in the market. A tight mortgage market has been blamed for holding the US property market back from its full potential for years. However, while that hasn’t changed too much for regular home buyers, capital markets appear to continue to be fueling rental home investment activity.
The latest reports show that despite increased confidence and sales activity in the housing market, mortgage lending remains tight for consumers. The National Association of Realtors’ Economists Outlook and mortgage originator survey shows both concerns over servicing issues and regulatory risk as significant factors in restricting new lending activity . The Urban Institute and Market Watch report that lenders have still been turning down over 1 million loan applications per year, from borrowers who would have been approved in 2001. In fact, Market watch says more people aren’t even bothering to apply for credit.
Is a blanket mortgage loan just what you need to optimize your rental property portfolio? There are thousands of real estate investors out there with multiple rental properties, who are not yielding the best possible returns. Blanket mortgages could be one of the simplest and most effective options for turning this around.
A blanket mortgage loan is a single loan which can be collateralized by multiple properties. For example; instead of applying for and juggling 10 individual loans on 10 single family homes or apartment buildings, investors can use a single blanket loan to borrow against all of them. It is one set of paperwork, just one loan to service each month, or to consider refinancing or retiring in the future.
There can be many advantages of these loans for optimizing income property portfolios.
Rental property investment activity is expected to soar in 2017 fueled by new confidence and a brighter economic outlook. Home sales hit a new record in January 2017 according to NAR and the US Census Bureau. Builders are expected to continue to expand, and investors are eagerly searching for deals. It all bodes well for the market for the foreseeable future. At least for those with the capital and financial sources to seize on current opportunities.
We are clearly in a new economic mode, with multiple fundamentals signaling greater times ahead. In February 2017, private US employers added almost 300,000 jobs, beating expectations by close to 30%. Tens of thousands of addition jobs are to be added as manufacturing firms return to the US, or expand their American footprints. Fox Business reports that wages have finally been rising. Up 3% already, higher pay is likely to be compounded as employers compete for workers.
At the same time stock indices have been notching up new record highs, and the Snap IPO has pushed tech to what some call almost ‘too big to fail’. So, while the economy looks great, forward thinking investors are looking to capitalize on the yields and equity gains that can be locked into in rental property investments.
Stated income loans are making a big comeback for commercial real estate financing After years of tight credit markets commercial real estate funding is flourishing again. Many have been sitting on the sidelines waiting for more lenient loan programs to return. Now they are here!
Stated income loans are a vital part of the real estate industry, and the economy. Now that they are returning the effects may not only brighten the finances of individual investors, but the wider market as well.
Stated income loans allow borrowers to qualify for real estate financing, without having to jump through all of the paperwork hoops, hassles, and time drain of full documentation underwriting. This not only provides investors speed and efficiency advantages, but can be an absolute necessity. Many experienced and savvy property investors have sat on the sidelines because they don’t want to deal with the inefficient complexities and quirks of income documentation. Others, who are self-employed, are full time investors, those who have complicated finances or advanced tax sheltering vehicles in place simply can’t verify income thoroughly enough. That ironically even spread to former Fed chairman Ben Bernanke, when even he couldn’t qualify to refinance his own home.
As stated income and other expanded qualification loans roll out and spread we should expect many more seasoned investors return to the market, while firms expand their acquisitions.
Each year is a new journey, it’s time to choose your paths and where you’re heading. It’s time to choose who you’re going with, how you’re going and when you’re going, we want to be there with you to help in that success.
Choose to experience beautiful twilights and incredible trips, and to smile spontaneously. Choose to cultivate friendships, and spend time among good friends. Choose to love, constantly and abundantly, and may this never be too little. Because every good choice we make deserves to happen someday.
As this year draws to a close, we at Rental Home Financing would like to wish you a Happy New Year and thank you for your patronage over the years. Our company would not have been this successful had it not been for the support that we have been provided with by our most prime assets – our customers.
We anticipate that the coming year will bring with it more in terms of mutual success. Rental Home Financing is committed to providing you with exceptional services and we will do our best to keep our service standards high in the next fiscal year as well.
The rental housing in the Indiana real estate market market has been growing fast in the past 3 years. Real estate agents are selling homes now faster than ever seen. Our highly competitive rates, plus the improving job markets and recent expansion of flexible lending requirements for blanket mortgage loans has Indiana property the best since 2006.
The increase in Indiana home buying has led to a shrinking supply. This is leading to a robust market providing rental home investors the best accumulative values not seen since the last peak a decade ago. New blanket loans for investors helps ensure the pace.
Future Investor Profits Look Great
There’s still plenty of demand from renters and buyers on the in search of a home. The low supply and high demand means your rental and resale profits continue to grow.
Demand for real estate continues to push forward and it's economic foundations remain strong. We agree with most forecasts for the upcoming year expecting expecing continued growth in the real estate markets for investors
Data for the locations where homes are in most demand are provided in the chart below. The data is ranked by montly progress by realtor.com, not yearly so keep that in mind. For example, Oregon has a huge housing demand growing from the influx of people from california, on a yearly progress chart would surely make the top.