Anyone using a guidance line of credit?

Question

Anyone using a guidance line of credit for their acquisitions?

I went to my bank yesterday to hash out the details of my most recent brrrr deal, (which went great) and my banker suggested a guidance line of credit when I ask what options they had to allow me to move faster in my acquisitions.

Up til this point, I have been using commercial financing, that involves 20% down to purchase the property, then I am using a HELOC and a BLOC to do my rehabs. Then refinancing out and paying off the heloc the bloc and the existing mortgage. Which I’m ok with as long as I can continue to find off market deals. But recently, there have been some decent deals come across the MLS that I would’ve like to at least offered all cash on with a quick closing.

We didn’t have a lot of time to discuss to guidance line of credit. But she is suppose to get back to me in a few days. Anyone with experience on this type of line of credit I would like to hear your opinion of it.

Thanks

Doug Smith · Answer

@Preston Quinn I was a banker for 25 years and I did many guidance lines for several purposes. A guidance line is a commercial line of credit that’s often given to developers as they develop property. The bank is approving up to a certain amount under certain criteria for you to go out and purchase property, of course with their approval. Most of the draws will be termed out with installment payments. The problem is that most banks are not fond of doing guidance lines, or doing financing in any other manner, for smaller real estate investors. It would be certainly worth exploring if they’re willing to do that for you. Most branch bankers don’t have experience in commercial lending, so they probably will not know their banks policy. Make sure you’re dealing with someone that actually directly does guidance lines and works with real estate investors. I wish you luck.

Nicole Heasley Beitenman · Answer

I have never heard of a GLOC, so I did a brief Google search. What I don't understand is how a GLOC is different from a pre-approval. Did the banker provide any other insight? I would love to hear about your upcoming conversation when your banker gets back to you.

Preston Quinn · Answer

@Doug Smith

Thanks Doug, I feel like I use the best bank in my area. They’re extremely small and extremely logical. One example, they only check my credit once a year. Idk if that’s standard practice with commercial financing or not. I am definitely going to dig further into this.

I know a few big developers in my area use this bank for the same reason. They’re just really easy to work with. Hopefully something good comes out of this.

Thanks again!!

Preston Quinn · Answer

@Nicole Heasley

I searched it as well on google. I’ll post what I find out when I hear back.