Borrowing against yourself puts you in control. It ensures that you have favorable rates and terms while the risk is contained. But creative purchasing can work against you. If you leverage too much, it will leave you with minimal equity and cash flow. In this solo episode of Real Estate Investing for Professional Men and Women, I wanted to continue our theme of creative purchasing strategies. I explain the concept of blanket mortgages and how to use them so you can build a stronger portfolio.
Find Your Source
In real estate, leverage is simply the use of your money or someone else’s. So, when we talk about borrowing against yourself, it means leveraging what you already have to invest in more real estate. The seller, the property itself, the tenants, and a wide variety of other options can be available to you as sources. But a blanket mortgage covers your existing properties and the equity portions of them. It enables you to avoid the hassle of refinancing or taking an individual equity loan against each property.
The blanket mortgage will provide you with the money you need to acquire a new property in the form of a loan secured by all of your existing properties. It puts you in a much better negotiating position for the next deal. And while you’re borrowing from a third party, the blanket mortgage is encumbering what you already own. It is one of my favorite strategies that I have used over the years and we will be covering more creative purchasing techniques in future episodes. If you are interested in learning more about blanket mortgages, make sure to visit www.myinvestmentservices.com and click on the member’s section.