Closing on a new construction STR, or so I thought.

[Ryan O.]

Hello all,

I thought I would seek out some advice or perhaps some ideas for financing that I haven't considered. Long story short-er, I have been working with a bank to close on a 12 month construction loan with the option to do a 20 year ARM with them or find another lender upon completion and turn it over to them. This is for a cabin in a well established STR market. I have been working with this bank along the way and got everything approved by both the loan officer and regional manager as we went. Everything has gone smoothly so far: I purchased the lot for cash, have a builder with an approved house plan and have the appraisal back which is well over the build/lot cost(LTV for the bank would be ~55%). The problem is, now the bank doesn't want to continue with the loan. The bank is concerned that I couldn't cover the note if the cabin doesn't rent. They are also concerned about overall trends with the market and their saturation in the specific market. Basically, they don't want to get stuck with the note if the market turns. Does anyone have any ideas on options I have? thanks in advance.

[Upen Patel]

@Ryan O. I am a banker, and can do construction loans. It is generally for owner occupied or 2nd home, but I have been able to get exceptions. Happy to speak and see if your scenario is something I can ask for an exception on an investment construction.