Don’t Let Paperwork Kill Your First Real Estate Deal!

[Trina Woods]

Hey, first-time investors, this is my first post on BiggerPockets so we are both newbies in that sense. I wanted to add a bit to the community to help investors prepare for their first deal. So, you found the perfect property, you're pumped about getting a DSCR or Fix & Flip loan, and then—BAM! —your loan is stuck because of paperwork. Yep, the dreaded documentation drama.

As someone who’s been both a loan processor and now a loan officer, I’ve seen these mistakes way too many times. So, I put together some of the more common mistakes that I have seen.

Your LLC Paperwork is a Hot Mess

You set up an LLC because it sounds official, but if your paperwork isn't right, the lender won't be impressed. A lot of new investors either don't have all the required documents or have mismatched info across different forms. Maybe you never got your EIN letter from the IRS, or your Operating Agreement is a generic template that doesn't actually list who owns what. Or the minority (3%) owner on your Operating agreement is the only person with a 600+ credit score and wants to be the sole guarantor. (that's not going to raise eyebrows)
The easiest way to avoid this mess? Make sure your LLC is properly set up before you apply. That means having a valid EIN, an Operating Agreement that reflects actual ownership, and proof your LLC is active. If you’re not sure whether everything is in order, check with your LO before you apply,

Your Bank Statements Look… Suspicious

Lenders actually read your bank statements (shocking, I know). And nothing makes them more nervous than huge, unexplained deposits, low balances that won’t cover reserves, or random screenshots instead of official statements. If your bank statement has a $50K deposit that came from “a friend,” the lender is going to want to know more. If you have just enough to close but zero reserves, that’s going to be a problem too.

The best way to avoid this? Keep at least 1-2 months of solid bank statements ready to go (some DSCR lenders require 3 our company requires only the most recent bank statement). If you have large deposits, be prepared to show where the money came from—whether it's from another account, a sale, etc. And please, for the love of all thing's real estate, download the PDF version from your bank instead of sending a blurry screenshot or photo taken from three feet away that includes your whole family.

Your Insurance is Missing or Just… Wrong

Lenders need to know that if something goes sideways, the investment is protected. Be sure to ask for the EOI requirements upfront from your Loan Officer. The $200 annual policy that you already have probably will not meet all of the requirements that the lender needs. To avoid this, get your insurance policy lined up early. Talk to your insurance agent and make sure the policy meets the lender’s requirements. If you’re flipping a house, you need a builder’s risk policy or a vacant dwelling policy, not a regular homeowner’s plan

Your Rehab Budget is a Fantasy

For Fix & Flip loans, we need a solid rehab plan, not a vague "I’ll figure it out." Lenders want to see an itemized breakdown of costs—not just a round number your contractor threw out. If you tell the lender you’re updating a kitchen for $2,500, with no actual detailed items listed, they’re going to raise an eyebrow.
To avoid this, get detailed estimates from contractors and put together a realistic budget. Make sure you’re including all costs, including materials, labor, and contingency funds. If your numbers are wildly off, this can cause an issue pre and post-closing.

Your Market rent and Actual rent doesn't match

For DSCR loans, the loan is based on rental income, not your personal income. That means if the appraisal comes back lower than expected or the rent roll doesn't match what you claimed, you could be in trouble. If you told the lender market rent is $3,000/month but the appraisal says $2,200, that's going to affect your DSCR ratio and could reduce the loan amount. If the property is vacant but you didn't mention it, that's another problem. To avoid this, make sure your rental projections are realistic and backed by actual comps. If the property is already rented, have leases ready to submit. And if it's vacant, be upfront about it—don't wait for the lender to find out through the appraisal.
Last but not least... HOA documents.
If the property you're buying is in a homeowner's association (HOA), you need to get the HOA questionnaire ordered early—like, as soon as you go under contract. Trust me, waiting on an HOA to fill out a form can feel like waiting for paint to dry. Some take days, others take weeks, and some charge an absurd fee just to send it. If the lender doesn't get the HOA questionnaire on time, your closing is delayed. Avoid the headache by ordering it ASAP and making sure the lender gets it well before the closing date. If the HOA is slow, follow up relentlessly—or better yet, have your title company or real estate agent help push it through.