Blanket Loan vs Cash Out?

[Ben Meier]

Greetings BP'ers,

My coworker/mentor has a financing issue to resolve. He owns currently 17 shf properties (all paid for) and is looking at a small apartment complex (10+ units under 500K). He has the equity to cover the loan a few times over but doesn't quite have the cash for the down payment on the commercial loan due to recently paying off his 17th home and making a few big ticket repairs. 

What are his best options? 

Should he cash-out refi a couple of properties to come up with the down payment? 

Find a portfolio lender who will loan him the down payment based on his assets?

Include one or more of the properties to secure the commercial loan? 

Any help would be appreciated. I finally turned him on to the BP podcast and want to see him take off like a rocket.

[Eric Y.]

I'm certainly not your expert but here's what I see:

• Portfolio lender using his assets is probably a good option but it will lock him in bed with that lender.  With the lender that I use, there isn't any extra closing costs to using those assets where a cash-out refi will have costs.
• Cash-out refi: you can use that cash however you like with fewer strings attached.  With the portfolio lender option if something falls apart he could lose his commercial property AND the asset that secures it.  Cash-out refi carries less risk (I think......)