Corey wanted to build a short-term rental on land he already owned. His bank turned him down because they don't finance construction on investment properties.
The Situation
Corey owns land free and clear (purchased 2 years ago)
Wants to build a $420K home on the lot
Expected appraised value: $700K when complete
Plans to use it as a short-term rental (Airbnb/VRBO)
He and is wife have strong income and don’t need need rental income to qualify
The Challenge
Corey's bank doesn't offer construction loans for investment properties.
Their concern: Borrowers might use residential construction financing to build a spec home, then flip it for profit. That's commercial activity disguised as residential lending, and it creates risk they're not willing to take.
Different banks have different policies on this. Some will do it, most won't.
How We Structured It
One-time-close construction loan using an agency product.
Loan amount: $420K
Expected value at completion: $700K (60% LTV)
Qualified on Corey's W2 income alone (didn't need rental income)
If we had needed it: could use 75% of fair market rent to qualify
Why This Might Matter
Most banks don't offer construction loans for investment properties, either because of portfolio policy or concerns about spec-home risk.
Pattern to watch for:
Borrower owns land and wants to build a rental property
Strong income and credit
Investment property construction (not primary residence)
If you've got a borrower who wants to build on investment property and it doesn't fit your lending policy, this is a structure that can work.
Work With Me
Do you have a deal that doesn’t fit your credit policy but the client seems solid?
Reply to this email or call me at 616.298.2743 for a same-day answer.
What I specialize in:
HELOCs (complex income, credit issues, or property condition challenges)
VA loans with high DTI or non-traditional income
Low credit scores with compensating factors (equity, down payment, strong income)
Recent self-employment with documentable income
Non-QM and investor DSCR loans
Construction or Renovation loans that have been declined at the bank (lower scores, or needs VA or FHA construction/reno)
What I typically don’t do:
Manufactured homes under $150K loan amount
Raw land purchases
Small construction loans under $300K
If you're not sure, just ask. I'll give you a same-day answer.
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