What Is a Portfolio / Blanket Loan?
A portfolio loan (also called a blanket loan) consolidates multiple investment properties under a single mortgage. Instead of managing 10 separate loans with 10 different payments, terms, and lenders, you have one loan, one payment, one set of terms.
This is designed for investors who have scaled beyond 5-10 properties and want to simplify their financing structure, reduce closing costs, and potentially improve their overall terms through the combined strength of the portfolio.
The scaling play: Conventional financing caps you at 10 properties. Individual DSCR loans work but create an administrative nightmare at scale. Portfolio loans are how serious investors manage 10, 20, 50+ doors under one streamlined structure. One lender relationship. One payment. One annual review.
How Portfolio Loans Work
The lender evaluates your entire portfolio as a single entity. They look at the aggregate rental income across all properties, the combined value, the overall DSCR of the portfolio, and your track record as an operator. Individual properties that might not qualify on their own can be carried by stronger performers in the portfolio.
Terms typically include 5-10 year balloons with 30-year amortization, or fully amortizing 30-year terms at slightly higher rates. Interest rates are often negotiable based on portfolio size — larger portfolios get better pricing.
Types of Portfolio Financing
- Blanket loan (cross-collateralized) — All properties secure one loan. If you sell one, the release clause lets you free it from the lien by paying down a proportional amount.
- Portfolio DSCR — DSCR calculated on the aggregate of all properties. Weaker performers are offset by stronger ones.
- Entity-level financing — The loan is made to your LLC/Corp based on the entity's portfolio performance.
- Credit facility / line of credit — Revolving credit secured by your portfolio. Draw against it for new acquisitions, pay it down as you refinance individual properties.
Release Clauses
This is the most important structural element of a blanket loan. A release clause allows you to sell or refinance individual properties out of the blanket without paying off the entire loan. The typical release price is 110-125% of the allocated loan amount for that property. If a property is allocated $100K of the blanket loan, you'd pay $110K-$125K to release it.
Without a release clause, you can't sell any property without paying off the entire loan. Always negotiate this upfront.
Who Should Consider Portfolio Loans
- 5+ property owners who want to simplify their financing
- Investors hitting the Fannie/Freddie 10-property cap who need a new financing structure
- Operators buying packages (5-20 properties at once from another investor or estate)
- BRRRR investors who want to consolidate after multiple individual refinances
- Landlords with free-and-clear properties who want to pull equity out of the portfolio without individual cash-out refis
What to Watch Out For
- Cross-collateral risk — If you default, the lender has a lien on ALL your properties, not just one. The risk is concentrated.
- Release clause terms — Read these carefully. A bad release clause can trap you.
- Balloon maturity — Many portfolio loans have 5-7 year balloons. You'll need to refinance or pay off at maturity. If rates have risen or your portfolio has issues, this can be a problem.
- Prepayment penalties — Often more restrictive than individual loans. Understand the terms before you consolidate.
- Minimum portfolio size — Most lenders require 5+ properties and $500K+ in aggregate loan amount.