So the seller cannot go get another loan for a car, house, apartment, etc. so it damages their credit by stretching them too thin.Am I missing something? 

Ask the builder or their legal representative for a copy of the CC&Rs (Covenants, Conditions, and Restrictions) or any supplemental documents specific to the development.Financing Considerations: If you’re financing the property, some loan types have limitations on renting out a home within the first year.

@Kate GranahanHi Kate, we make loans on mixed use properties.

Do you mean Home Equity Loan?

FHA loan.

should a private lender ever ask for a 1% insurance paymentBefore completing a loan?

In 30 years the balloon payment is due to the seller and that's when the taxes are due.Coupling a monetization loan to an installment sale accomplishes the same thing but puts cash in the sellers hands that can be re-invested.

Investment Info:Condo private money loan investment.

Loan terms seem reasonable.

It sounds like the issue is with the Debt Service Coverage Ratio (DSCR), which lenders often use to determine how much they’re willing to loan.