Can I use current rental property as collateral in obtaining a mortgage?

My family and I own several residential properties that are currently being rented out. Collectively, they are worth about $900K and we have roughly $350K in mortgages on the properties.
Would it be possible to use the equity in these properties to obtain a mortgage for a commercial property? We would buy something that would be net leased to a high quality tenant preferably. We also have roughly $350K available as a down payment. What would be the best way to use the cash and/or equity to obtain a mortgage?
In Buying Property - Asked by Allen C. - Jun 22, 2013
Report Abuse
Answer this Question


Michael C.
San Leandro, CA

It may be Possible using a Technique called a "Blanket Mortgage", where Multiple Properties are used as Collateral Including the Property Being Purchased. There has to be Sufficient Equity to Satisfy the Lenders Requirements. Each Lender has their Own Guidelines for this.
Additional Considerations: Will the lender Allow the Blanket Mortgage to be removed and let the property to stand on its own merit if there becomes sufficient equity in it?
Will the Lender Permit a "Substitution of Collateral" ? This will allow you to Change the Properties Under the Blanket Mortgage if you want to Sell or Refinance one of the Properties and Still Keep The Loan - Requires Appraising the Property/Properties being used.
Use as Few Properties as Possible when Requesting this Type of Financing.

Jun 23, 2013
Report Abuse
Art G.
Lender/Mortgage Broker
San Francisco, CA

Using multiple properties as cross collateral is something that is routinely done by a variety of private money firms including ours. As long as the CLTV ( combined loan to value ) doesn't exceed say 65% then you should be in good shape.

Jun 30, 2013
Report Abuse
Yanni R.
Lender/Mortgage Broker
Sherman Oaks, CA

Hello Allen: Yes cross collateral is an option so long as the collective loan to value does not exceed 70%. My company would be happy to help you achieve this goal. For more information about PrIvate Lending, you can select the web reference below. Wishing you success, Yanni

Nov 8, 2013
Report Abuse

Welcome to Answers

LoopNet Answers is where the commercial real estate community shares what they know to help each other out. And it's all for free.

Ask a question to get advice from brokers, investors, professionals and local experts.

Answer questions to raise your visibility as a trusted advisor and build new relationships.

Ask a Question

Post Question