Frequently Asked Questions
What is a blanket loan?
A single mortgage secured by more than one property, with all properties serving as collateral for the same debt.
How is it different from a portfolio loan?
In practice the terms overlap heavily. Blanket emphasises the single lien structure; portfolio emphasises aggregate underwriting. Many facilities are accurately both.
What is the main benefit?
One transaction, one set of closing costs, one payment, and underwriting based on combined performance rather than each property standing alone.
What is the main constraint?
The properties are tied together. Selling or refinancing one requires a release, which is more involved than paying off an individual loan.
How does a release work?
A provision allowing one property to be removed from the collateral pool, typically requiring a paydown of a specified amount and lender approval.
What does a release cost?
Terms vary. Common structures require paying down more than the property's proportional share of the loan, which preserves the lender's coverage on the remaining pool.
Can I refinance one property individually?
Not while it is part of the blanket facility. You would need to release it first, which requires meeting the release terms.
Is this suitable for a growing portfolio?
It can be, particularly for consolidating existing holdings. If you buy and sell frequently, the release mechanics add friction.
What happens if I default?
The lender's remedy extends across all properties in the pool, not just one. This concentration of risk is the trade-off for aggregate underwriting.
How many properties can be included?
It varies by lender. Some facilities accommodate a handful; others structure much larger pools.
Do all properties need to be similar?
Not necessarily, though a mixed pool of property types may complicate underwriting. Lenders generally prefer consistency.
Can properties in different states be combined?
Often yes, subject to the lender's licensing and program scope. Recording requirements differ by state, which affects cost and process.
Are closing costs lower?
Generally yes on a per-property basis, since you pay one set of loan-level costs rather than several. Per-property costs like appraisal still apply individually.
How is insurance handled?
Each property needs coverage meeting the lender's requirements, typically with the lender named on each policy.
What reporting is required?
Some facilities require periodic rent rolls or operating reports. Ask about ongoing obligations before closing.
Can I add a property later?
Some facilities allow additions; many do not. If your plan involves continued acquisition, confirm this upfront.
Does a blanket loan affect my personal guarantee?
You typically guarantee the entire facility rather than individual properties, which means your guaranteed exposure is the full loan amount.
Is this better than individual loans?
It depends on your strategy. Consolidation and simplicity favor blanket structures; flexibility to transact individual properties favors separate loans.
What if one property underperforms?
The aggregate coverage absorbs it, which is a genuine advantage. The constraint is that you cannot easily separate it from the pool.
What should I evaluate before choosing this structure?
How often you expect to sell or refinance individual properties, and whether the release terms accommodate that. If you transact frequently, the friction may outweigh the benefits.
