Why Great Deals Aren't Funded?

Before we dive straight to the point, I would like to thank you for reading. First, we must understand the components of a great deal. Here are a few of the various. 

1. Purchasing with equity (instant profit) This means knowing your market well. 

2. Do not allow the ARV (after repair value) be the sole purpose as to why you're investing 

3. If flipping neighborhoods that have a shorter Days On Market - 90  days max. 

Through my experience I've been on both sides of the fence. Wholesale, fix & flip, short sales etc.  Moreover now, I wear the Private Financier cap. What I come to notice by asking a few questions from clients and even reading stories here; on Bigger Pockets.  The common denominators are deal structuring and underwriting requirements/knowing how the funding works.

Sometimes the way you want to structure a deal may not coincide with most lenders funds. Therefore simple re-work may have lenders flocking to you. 

Ex:  Client Structure - Refinance commercial properties to pay off taxes and current mortgages which are in default.  This is a very niche market, from a lending point of view it's hard to lend on a property which taxes aren't paid on and the mortgage is in default.  It doesn't matter if the property is cash flowing especially if the bill isn't being paid. This is where the questions of needing and LOE/LOX (letter of explanation) may come into play. 

Re-structure: After reviewing client PFS (personal financial statement) there were several other assets which were more suitable to rectify his needs. Properties which are not in default, properties which are cash flowing, and are owned free and clear.  It came down if client will want to use those assets or not. 

Underwriting requirements and knowing how the funding works.   I see this most often and we hold 1 hr+ classes explaining this disconnect. This is often highly misinterpreted. Which ever lender you use, it's detrimental to your time and pocket to have a full grasp of how their funding is structured and their underwriting requirements.  I highly suggest, DO NOT move forward if you don't get it.  I hear stories as to why people don't like this lender etc. When we dive in the details sometimes I find that it's simple misunderstanding. 

  Few Things you'd want to know:

1. Are they funding based on AS is Value or After Repair Value (flipping)? 

2. What's the LTV %?  is it based on purchase price or value? This becomes tricky and very confusing for most.

3. When appraising property are they solely pulling comps of all distressed properties and or the lowest values to determine value? 

4. Is credit a factor in determining approval?

5. Is a background a factor in determining approval?

This list can go beyond of what I've listed.  I've narrowed it down to the common reasons that I've heard and that have came across my desk.  Please feel free to add your comments and your stories.