Ask any investor with more than five properties about their loan drawer and you’ll get a groan. Multiple closings. Multiple lenders. Multiple insurance certificates. Once your portfolio grows past a certain size, the paperwork alone feels like a second job. That’s where portfolio and blanket loans come in: financing structures designed to consolidate properties into one note. They can unlock growth, efficiency, and leverage—but also expose you to risks that don’t exist with single-property financing.
What Exactly Are Portfolio & Blanket Loans?
The two terms overlap, but they aren’t identical:
- Portfolio loan: A loan the lender holds on its books (not sold to Fannie/Freddie). Terms are flexible, tailored, and based on relationship.
- Blanket loan: A loan that covers multiple properties under one promissory note, usually secured by cross-collateralization.
Most blanket loans are portfolio loans by nature. The lender keeps them, prices them higher than agency debt, and underwrites them on a commercial-style basis (global DSCR, net worth, liquidity tests).
Why Investors Use Them
- Avoid agency caps: Fannie/Freddie stop at 10 financed properties.
- Simplify management: One monthly payment, one maturity date, fewer closing costs.
- Unlock equity: Cross-collateralization sometimes allows higher leverage than standalone refinances.
- Scale faster: Bundle stabilized properties, then deploy freed-up capital into new acquisitions.
Investor Story #1: Marcus Consolidates for Growth
Marcus had 12 single-family rentals, each with its own lender. Tax prep took weeks. Refinancing meant negotiating 12 times. He rolled all 12 into a blanket loan with a regional bank: one payment, one interest rate, and a global DSCR test. His monthly admin dropped by 80%. With freed-up cash flow, he doubled acquisitions the following year.
Investor Story #2: Dana’s Cross-Collateral Burn
Dana bundled six rentals into a $2.8M blanket loan. Two properties underperformed due to vacancies. Because of the cross-default clause, the lender had rights against all six—even the ones performing well. When she couldn’t cure quickly, foreclosure threatened the whole portfolio. The lesson: cross-collateral ties your best assets to your weakest link.
Investor Story #3: Timing the Market Wrong
Ravi refinanced 15 units into a 5-year blanket with a balloon. At year four, rates had jumped 250 bps, and cap rates had softened. His refinance proceeds fell short of payoff by $600k. He was forced to sell three properties at a discount just to cover the balloon. His mistake wasn’t the loan—it was ignoring interest-rate and market-cycle risk on a large maturity event.
Lesson: Blanket loans simplify growth, but they also magnify risk. Market timing, cross-defaults, and balloon maturities can create portfolio-wide stress.
Terms You’ll See in 2025
| Term | Range | Notes |
|---|---|---|
| Loan Length | 5–30 years | Often fixed 5–10 with balloon; some offer 30-year DSCR style. |
| Rates | 7–10% | Higher than agency, priced like commercial. |
| LTV | 65–75% aggregate | Calculated on combined value of pledged properties. |
| DSCR | 1.15–1.25+ | Tested at portfolio level, sometimes property-by-property too. |
| Prepay | Step-downs or yield maintenance | Negotiate carefully; can kill flexibility. |
Pros & Cons
- Pros: Efficiency, fewer closings, global leverage, faster scaling.
- Cons: Cross-collateral risk, balloon maturity exposure, complex underwriting, less flexibility on single-property exits.
Comparing Costs: Single Loans vs. Blanket
Suppose you refinance 10 properties individually vs. via blanket loan:
| Cost | 10 Individual Loans | 1 Blanket Loan |
|---|---|---|
| Origination Fees | 10 × 1% = $45,000 | 1 × 1% = $25,000 |
| Legal/Docs | 10 × $2,000 = $20,000 | $7,500 (consolidated) |
| Time | 10 closings (6+ months) | 1 closing (45 days) |
But: lose flexibility. Selling one property from the blanket may require release negotiations and prepay penalties.
Checklist Before You Blanket
- Are all properties stabilized with strong leases?
- Do you have liquidity to cover vacancies across the group?
- Do balloon terms align with your hold period and market cycle?
- Have you negotiated release clauses for at least partial exits?
- Do you understand cross-default language and its implications?
FAQs (Expanded)
Can I sell a single property out of a blanket? Sometimes, via a release clause. Typically you pay down a % of loan or keep DSCR/LTV intact. Always negotiate upfront.
Do blanket loans work for STRs? Yes, but underwriters will require consolidated income and may stress-test at long-term rents.
Can I mix property types? Often yes (SFRs, duplexes, small multis), but lenders prefer uniformity. Large mixes (SFR + commercial) may trigger commercial underwriting.
What about taxes and insurance? Lenders usually require a consolidated escrow or proof of portfolio coverage.
What happens if one property tanks? Cross-collateralization means the whole loan can be in default. Plan reserves accordingly.
Bottom Line
Portfolio and blanket loans are tools for scale. They free you from the drag of single-property financing—but they also bind your assets together. If your properties are stable, your reserves are strong, and your horizon is clear, a blanket can unlock exponential growth. If not, it can tie a noose around your portfolio. As with all leverage, the tool isn’t good or bad—it’s how you wield it.
