In my state it can draw interest but does not have to.

The draw back here is not only a higher rate, but also a shorter term, along with higher transactional costs and the need to refinance every five or so years.

A couple of college friends and I wanted to startup a business by doing small jobs together on the side while gaining experience at firms once we graduate.If anyone is in need of architectural plans or drawings on a home renovation for a contractor or handyman to go by, I would be happy  to help :)I have all the software needed to draft efficiently and effectively (AutoCAD, Revit, etc.)

I have no problem with completion draws - these are normal and you should expect to pay these.

Yes an agent can handle a deal like this but you still definitely need an attorney to draw up the documents.

The construction funds are typically released in draws where you would advance the work first, then he would inspect and reimburse you based on your pre determined budget. 

Now that that builder can't draw construction money.

Do you use a property management company to handle your rentals or know of a good lawyer that can draw up strong lease agreements?

Option 2 also theoretically helps with my debt to income ratio though I have no issues there at the moment either.Cons of option 2 include the fact that the LOC is a variable rate and will likely go up in the future as well as the fact that the bank could chose to close the draw period at any time.

It will cost about $300 give or take for your area for a consultation more if they need to do drawings for you.