Does a Blanket Loan Make Sense When Purchasing More than One Investment Property?If you’ve been investing in rental real estate for some period of time – or, even if you’re a new investor who plans to dive in with both feet right away – there may come a time when you purchase more than just one property at a time. Because financing is oftentimes necessary in order to complete a property purchase, using just one single loan could offer some advantages over applying for and obtaining multiple new loans. This is where a blanket mortgage may be a potential solution.

A blanket loan, or blanket mortgage1 is defined as, “a type of loan used to fund the purchase of more than one piece of rental property.”1 As with other types of mortgages, the underlying properties will be held as collateral on the mortgage.

Obtaining a blanket mortgage can be a viable alternative to taking out a number of individual loans. But what happens if and when you decide to sell one – but not all – of the properties that are covered under a blanket loan?

The good news is that you can opt to sell properties individually that are covered by a blanket mortgage – one at a time – without having to retire the whole mortgage. Unlike with a traditional mortgage that will usually include a due-on-sale clause that states if the property that is secured by the mortgage is sold, the full amount of the debt must be paid, a blanket mortgage will instead typically have a release clause. With this clause, the borrower is allowed to sell “portions” of the underlying secured properties – and in doing so, there will only be a partial repayment of the loan that is required.

The purchase of multiple rental properties can add more time spent on your real estate activities. But, by working with a property management team, you can hand over the day to day property maintenance and tenant dealings. For more information on how working with a property manager can benefit your real estate investing, Contact Us.


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