Telling a lender "no" when asking for receipts for rehab

[Thomas Dionne]

I have bought my 1st property for 50k, put around 4k into it and appraised is for 94k (did appraisal on my own because i just had to know)I have like 4 people (out of 300 calls) already wanting to rent to own it that are on the VERGE of a loan.

Im super good at finding deals on labor and did some work myself. My main rehab guy is family friend and gave me a sweet deal on stuff. I have been told save receipts so you can show lender in future but i just dont have a big number even though we fixed a roof problem, paint, carpet, new countertops, lighting, garage door, etc.

People have warned me this would be a problem and I just wonder what others do. I asked a real estate mentor who I really respect and he said he tells them "NO, its proprietary, this is about what houses are selling for in the area not what I make, if u dont want the business i can take it elsewhere" if they ask for receipts and it has almost never killed a deal.

This blew me away, does anyone else do this? Is there a better way when you get good deals on rehab or do work yourself?

[J Scott]

First, ditch that real estate "mentor"...he's an idiot. Pissing off the lender/underwriter is the LAST thing you want to do when trying to flip houses in a market that has the tightest lending requirements in history.

Next, put together a list of repair costs and give them to the underwriter with whatever documentation you. You should have receipts for all the materials, and there is no reason you can't create invoices for the time and work you did on the job (though I'd probably do it through a company name, so it's not so obvious that the money wasn't actually spent on other contractors).

Or you can tell the lender that it's none of his business and see how far that gets you... :D