There’s a real deal that is getting ready to hit the market that your agent just told you about. It’s a steal at $300,000 and with enough work, you can flip it for a quick $30,000 or clear $1,000 each month in rental income. You drive by the property andprivate lending see for yourself that it does need some work.

In fact, it needs a lot of work. So much work that a bank might not finance the property. You can have a 50 percent down payment, a credit score in the stratosphere and debt to income ratios in the single digits. But if the property doesn’t pass muster in two primary areas, all of your personal credit profile simply won’t matter.

If the property isn’t currently habitable or is considered in “poor” condition by an appraiser, the bank will sit on the sidelines. Primarily such concerns relate to structural issues such as a sagging roof or foundation problems. That’s the bank’s collateral and they want it to be in a marketable condition before placing any long term financing. Private lenders can help, but not banks.

Less significant issues such as flooring, paint or dated appliances are not an issue but major problems are. You can get financing for a property from a private investor who will approve a short term loan to acquire and repair the property, but a traditional lender will pass on it until the repairs are made.

The second stage of approval involves what is called “comparable sales” or simply “comps.” A bank wants to see at three completed sales within the previous 12 months, with one of those sales occurring within the past six months. If your prospective property is a single family home at about $75 per square foot when repaired, the bank wants to see evidence that a single family home at $75 per foot meets market demand. If there are no sales within the previous six or 12 months of similar properties, the lender will balk.

Private lenders are available to buy and prepare homes for traditional financing and there will be times when a private lender is needed. But traditional banks not only approve you, the buyer, but the property’s condition and marketability as well.