Should You Use A Blanket Mortgage To Invest in Real Estate? 

You already have your first real estate investment — whether it was a fix and flip or owning rental properties — in your back pocket. 

Great job! 

Now that you have that experience, confidence, and eye for properties, another real estate investment opportunity … with an incredible ROI that you can’t stop thinking about … may come around. 

Getting funding for one real estate investment can be a challenge.

But getting funding for two real estate investments?

Or three?

Or four?

Financing through a traditional mortgage can be slow.

Juggling multiple mortgages can be stressful. 

So, if you’re looking to invest in more than one property, what can you do? 

This is where a blanket mortgage comes in. 

With a blanket mortgage, you can secure a single loan that covers all your properties, saving you time, paperwork and also fees. 

Here’s the most important question: is it right for you and your real estate investing strategy? 

Keep reading to find out! 

What is a Blanket Mortgage? 

Blanket mortgages, also known as wraparound mortgages, are loans that cover multiple properties under a single mortgage agreement — similar to how a blanket can cover multiple people (or more) at once.

Let’s take a look at both the advantages and disadvantages that come with a blanket mortgage. 

Advantages of a Blanket Mortgage 

A blanket mortgage improves your buying power. 

With a blanket mortgage, you won’t have to wait on individual loans and closings for each specific property.

If you’re looking to acquire property within a short time, this type of loan will allow you to do so quickly and easily.

In an industry that moves fast, a blanket mortgage can help you secure a property while a competing offer is waiting on funds.

A blanket mortgage allows diversification. 

One of the key advantages of blanket mortgages is that they allow you as a real estate investor to diversify your real estate holdings. 

By consolidating multiple properties under one loan, you can spread your risk across different locations as well as property types. 

This diversification strategy can protect against risks such as an economic downturn, one property having high tenant turnover, or a property needing costly repairs.  

A blanket mortgage provides simplified financing. 

By securing a single mortgage for multiple properties, you can streamline your financing process — instead of juggling multiple loans, you’re just managing one — and reducing your administrative burden.

A blanket mortgage can save you money during the purchase of a new property. 

Consolidating multiple mortgages into one loan saves on closing costs and origination fees. 

This means more money in your pocket for costs such as improvements on your existing properties. 

Disadvantages of a Blanket Mortgage

While there are tremendous advantages with a blanket mortgage, it does come with disadvantages.

These disadvantages include:

A blanket mortgage can create a larger risk exposure. 

If one property in the blanket mortgage encounters significant financial difficulties, it can have a reverberating effect on the entire loan itself, creating more risk.

For example, if you default on a blanket mortgage, all of the properties within the blanket mortgage can be subject to foreclosure — a scary proposition.

A blanket mortgage can create additional fees. 

Blanket mortgages commonly have release clauses, which allow individual properties to be sold without fully paying off the entire loan.

But these clauses often come with specific requirements — and may trigger additional fees that can add up.

Not every lending institution offers a blanket mortgage. 

Because of their complexities, not every major lending institution will offer a blanket mortgage.

This can make it more difficult to find and obtain for your real estate investing goals. 

When A Blanket Mortgage Makes Sense

A blanket mortgage isn’t for every real estate investor.

Here’s a few scenarios when it makes sense. 

Landlords

For landlords who own multiple properties, whether it’s single family homes, duplexes or apartment complexes, a blanket mortgage can simplify the management process significantly. 

Flippers or Wholesalers

Flippers and wholesalers may want to buy properties often, and a blanket mortgage keeps you from having multiple closing expenses — and a tremendous amount of paperwork. 

How to Apply for a Blanket Mortgage 

Next, let's break down how you can apply for a blanket mortgage if you decide it's right for you.

Step 1: Meet Eligibility Criteria 

Before applying for a blanket mortgage, it’s important to meet the eligibility criteria. This includes:

Property Portfolio Value

Lenders typically require a minimum combined value for the properties included in the blanket mortgage.

The minimum loan amount is around $100,000. 

Property Types

Whether it’s two or three single family homes or an apartment complex, certain types of properties may have specific eligibility requirements. 

For example, commercial properties, such as office buildings or retail spaces, may require additional documentation, such as lease agreements or tenant information.

On the other hand, residential properties may require proof of occupancy or rental history to determine their value.

Your Financials

Similar to a traditional mortgage, lenders will your finances to determine eligibility, including:

• Creditworthiness
• Income
• Other investments 

Step 2: Apply & Submit Application

Remember, not every lending institution will offer a blanket mortgage, so it may take extra time to find one that does. 

Once you do, you will apply by submitting an application with the institution. 

Step 3: Property Evaluation

Next, the lender will evaluate the properties included in the blanket mortgage to determine their current and future value — and assess potential risks.

During the property evaluation stage, lenders will also conduct appraisals, reviewing market trends, and considering the potential for future rental income. 

Step 4: Loan Approval

If your application meets the lender's criteria, they will notify you of loan approval and provide you with the loan terms.

Step 5: Closing the Loan

Upon accepting the loan terms, you will complete the necessary paperwork — which will outline interest rate, repayment schedule, and any other fees — and close the loan. 

The Bottom Line: Blanket Mortgage

For real estate investors looking for fast funds — and funding for more than one real estate investment — there’s tremendous advantages with a blanket mortgage.

But like any real estate investment, a blanket mortgage is not without its disadvantages. 

That’s why educating yourself now on the intricacies of a blanket mortgage can ensure you make the right decision that will continue to pay dividends now and in the future. 

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