Should I take a blanket loan to fund my multi-family investment

[Account Closed]

Ok my BP gurus,

Here is my situation. I am looking to expand my real estate portfolio. I currently own 4 properties valuing around 500k-560k. 3 properties are fully paid off the other is at 50% LTV.

Looking to purchase a multi-family unit 4-10 units for under 200k (preferably about 100-150k) and keep for long term.

My idea was to do as I always have which was pull out the equity from my current homes to purchase the MF cash. I can get a better deal if paid cash but interest rates may be slightly higher (my equity line of credit is at 4.25%) I was thinking of using a portfolio lender and possibly getting a blanket loan on the 3 properties that are paid outright.

Any suggestions on loan options for my situation?

I currently have 10-20% cash on hand if I choose to do a 30 year fixed loan.

[Jonathan M.]

My suggestion is to purchase the MFR with financing and cross collateralize one of your homes for added security to meet the usual 75% LTV. I do this all the time - particularly with distressed MFR which will appreciate significantly once stabilized with new management and tenants. Using leverage will significantly increase your return on investment (pre and post tax) and reduce the amount of equity tied up in each deal.

I keep one or two properties free and clear to provide additional collateral for new acquisitions, but everything else gets some level of financing placed on top because interest is tax-deductible and mortgaged properties are less appealing targets for lawsuits.