By Huber Bongolan
If you’re a new real estate investor looking to finance your next (or first) deal, getting approved for a loan isn’t just about finding a lender. It’s about putting your best foot forward. At Flipside Lending, we work with new investors every week—and we’ve seen where deals can fall apart.
Below are the top 7 mistakes that new real estate investors make when applying for a loan—and how to avoid them.
Many investors fall into the trap of believing their property is worth more than it actually is—either today or after renovation. While investor confidence is great, lenders rely on third-party appraisals, not gut feelings or Zillow estimates.
Pro Tip: Before submitting your loan application, review recent sales comps and talk to a broker or appraiser to get a reality check on current value and resale assumptions.
We’ve had borrowers tell us they have a 720 FICO—only to pull credit and find a 660. Your credit score affects your rate, leverage, and even your eligibility. Knowing your real score avoids surprises during underwriting.
Pro Tip: Pull a free credit report in advance and resolve any issues that may be dragging your score down.
You might have just enough cash to close—but that’s not enough. Lenders want to see that you still have money in the bank after the deal funds. Why? Because unexpected repairs, delays, and debt service don’t stop once the loan closes.
Pro Tip: Aim to have 3–6 months of debt service payments in reserves after your down payment, closing costs, and rehab budget are accounted for.
Underwriting a loan is paperwork-intensive. The faster you can provide clean bank statements, entity docs, and a renovation budget, the faster we can fund your deal. Every missing document slows things down.
Pro Tip: Keep a digital folder with all your business and financial docs ready to go. You’ll thank yourself later.
Builders are often optimistic—and that’s putting it lightly. While it’s tempting to say the project will be done in 4 months, most city inspections, weather delays, and contractor schedules don’t follow your ideal timeline.
Pro Tip: Be conservative with your construction timeline. Add buffer months and communicate delays early to avoid maturity defaults.
A 10% contingency isn’t just a nice-to-have—it’s a must-have. We regularly see budgets go over due to rising material costs, change orders, or unforeseen issues. Without a contingency, you risk running out of funds mid-project.
Pro Tip: Always include at least a 10% contingency line in your budget and be prepared to explain where it might be used.
Real estate is a team sport. Too often, new investors wait until the last minute to ask questions, gather documents, or structure their loan request. At that point, it may be too late to fix avoidable issues.
Pro Tip: Talk to your lender early. A 15-minute call could save you thousands—or your entire deal.
Getting a real estate loan doesn’t have to be complicated—but it does require preparation, honesty, and the right expectations. At Flipside Lending, we help new investors every day and guide them through the loan process so they can focus on building their portfolio.
Avoid these 7 mistakes and you’ll be ahead of the pack.
Good luck out there, my friends. I’m always happy to help so feel free to email me at hbongolan@flipsideloans.com.
