Starting Out
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Updated 29 days ago, 11/26/2024
Things to look for when vetting your potential borrower
As private money lenders, protecting your investment starts with careful borrower vetting. Here are some key red flags to watch for:
🔴 Lack of experience: A borrower without a proven track record in real estate projects may struggle to navigate unexpected challenges.
🔴 Overly optimistic projections: Unrealistic ARV (after-repair value) or underestimated rehab costs can signal poor planning—or worse, a lack of transparency.
🔴 Incomplete or disorganized documentation: Missing detailed plans, financial statements, or timelines could mean the borrower isn’t ready to execute the project successfully.
🔴 Over-leveraged finances: Borrowers with excessive debt or insufficient personal capital invested in the deal could pose a greater risk of default.
🔴 Questionable property comps: Overstated market values or inappropriate comparables may mean they’re inflating expectations.
As always, thorough due diligence is your best protection. Working with vetted, trustworthy borrowers and maintaining a robust vetting process will help ensure your capital works as hard as you do! 💼💰