Posted By: Melissa S
Purchase to fix and sell - 02/15/22 04:56 PM
This is my next-to-last loan to review and I am just about brain dead.
Loan has a 15 year term and is a balloon. Purpose is to purchase an existing single family residence property, do cosmetic repairs, and sell it, paying off the loan with sale proceeds.
The borrower has no plans to rent it; the sole purpose is to flip it.
My initial conclusion is that this IS reportable, as he is purchasing a dwelling and it will be collateralized by the purchased property. It is not being treated as a construction loan; the financing is already "permanent". It is an investment property, although the investment is only to turn a profit on resale.
Am I right on this?
Loan has a 15 year term and is a balloon. Purpose is to purchase an existing single family residence property, do cosmetic repairs, and sell it, paying off the loan with sale proceeds.
The borrower has no plans to rent it; the sole purpose is to flip it.
My initial conclusion is that this IS reportable, as he is purchasing a dwelling and it will be collateralized by the purchased property. It is not being treated as a construction loan; the financing is already "permanent". It is an investment property, although the investment is only to turn a profit on resale.
Am I right on this?