Bank Financing. Rental vs. Flipped Property???

5 Replies

Good Afternoon BP!

I just recently got another property under contract that I will be performing a flip and I have run into a little issue with financing and was wondering if anyone else has encountered this:

I have used the same 2 banks for my 12 transactions in 2017/2018 10 have been rentals and 2 have been renovation/flips.  The first flip there was no issue and I don't think they even asked if it was a flip or rental and they were able to use all of my documentation that they used for the rentals.  BUT..... 

On this current transaction they are pulling tooth and nail and needing every single updated document as I told them this was a flip.  Has anyone else found it harder to get financing for flip properties over rental properties???

Best practice to just let banks assume it is a rental? 

Any advice/feedback is greatly appreciated.

Thank you!

@Cassidy Burns I’m going to follow your thread because I’m equally intrigued. My partners and I will hopefully have as much success as you have and because we’re on a similar pathway, I’m interested to see the answers that come back. Good Luck either way!

Hey @Jeff Piscioniere thank you! Yes, it's been a complicated transaction and financing has been more frustrating than normal (filling out new personal financial sheets, new applications for business loans, needs a copy of EVERY lease that I currently have even though I sent P&L as well as spreadsheets with income and expenses for every property). I sell real estate as my day job and I even had to ask my broker to send me a Q1 1099 example for him to view.....

Has anyone else experienced this?

Banks change their policies all the time and state and federal regulations will sometimes dictate these changes. It is most likely a knee jerk reaction the loan committee made because something similar went bad so now they are making their loan officers get more info. I went to my bank for the last 8 years to open a new business account and I have a 12 page question/answer form that they just started requiring in May...lucky me

Yes portfolio lender but they have about 25 locations in North Texas so I wouldn't call them small. My dad is also a SBA loan officer at a different (much smaller) lender in this area so I have the benefit of his insight as well.