Bank is offering me a guidance line for rental properties
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.