Bank is offering me a guidance line for rental properties

[Chris Adams]

I recently took on a 2nd bank to fund my buy and hold investments in SFR's. In my first meeting with the banker, I explained I had 1 home I was looking to finance that I owned outright, and I explained my plans to continue to acquire rental properties at the rate of 3/year. He offered finance the current SFR I was asking about. And then he suggested setting up a guidance line of credit for future properties.

I have had guidance lines for my new construction business, it simply meant they would finance construction of any pre sold contracts I had to build new homes for clients.

Now when it comes to having a guidance line to acquire buy and holds in a rental portfolio, I'm a bit puzzled as to what and how it will work. Could it be as simple as I bring him a property that meets a predetermined set of criteria and he converts it into a mtg?

This is a portfolio lender who gives me 5yr arms, with 2% caps @ 5.5% 20 yr amorts.

Is there a reason he offered me the guidance line rather than looking at each property on a case by case basis?

His initial thought was to set the guidance line up at $300k, most of my SFR's Run right around 100k ARV.

I am meeting with him about this on Wed and would like a better idea of exactly how this works and why I need this.

[Albert Hasson]

Chris, my LLC has a line of credit with a local bank. The way it works for us is we find a property, send the banker the escrow info and the bank will fund 60%, we fund 40%. The bank charges us a 1% origination fee but there is no underwriting, appraisal or inspection required. We have bought 6 properties using an 800k LOC and actually just called him today to try to increase the limit. Terms are great, 3.5% 30 year amortization, 3 year term then max 2% rise yearly based on 10yr note with 7% max.