Presenting your deal to a private money lender

Start with your track record and experience

Disclaimer: This content is for informational purposes only and is not financial advice. Consult with a qualified financial professional for personalized guidance.

Even if you are new, highlight any relevant experience you have, such as managing projects, sales, or other business ventures. If you have partners with experience, lean on his or her background. Private lenders want to know who they are entrusting their capital to.

If this is your first deal, be honest about it but emphasize your preparation, mentorship, and conservative estimates. Show him or her you understand the risks and have a plan to mitigate them. Confidence grounded in knowledge is key.

Detail the property and its condition

Provide a concise overview of the property, including its address, type, size, and current condition. Include photos, especially of distressed areas that justify your rehab budget. Show him or her you have done your due diligence on the asset itself.

Explain the neighborhood, comparable sales, and any unique selling points or challenges. A lender needs to visualize the property's transformation and understand its market context. Present him or her with a clear picture of what you are acquiring.

Lay out your acquisition strategy and funding need

Clearly state your purchase price, how much funding you need from the private lender, and any equity you are bringing to the table. Explain your offer strategy (e.g., cash offer, assignment) and why it was accepted. This shows you have a solid plan for securing the asset.

Break down the requested funds into specific categories: purchase price, rehab budget, closing costs, and holding costs. Be precise with your numbers. A hypothetical deal might need $100,000 for acquisition and $50,000 for rehab, for example.

Present your rehab plan and budget clearly

Outline the scope of work for the property, detailing major repairs and cosmetic updates. Provide a line-item budget for each aspect of the renovation. This demonstrates that you have thoroughly thought through the project's costs.

Include a realistic timeline for the rehab work. Lenders want to see that you can complete the project efficiently to minimize holding costs. Show him or her you know what needs to be done and how long it will take.

Explain your exit strategy and projected returns

Describe how you plan to sell the property (e.g., flip, wholesale, hold as a rental) and your anticipated After Repair Value (ARV). Show your conservative profit projections, including all estimated costs and the lender's interest. This is where the lender sees his or her return.

Provide clear comparable sales that support your ARV. Explain your proposed interest rate and terms for the loan. The lender needs confidence in both the property's value and your ability to execute the sale.

Be ready for questions and due diligence

Anticipate questions about your numbers, experience, and contingency plans. Have all your documentation organized and ready, including property reports, contractor bids, and financial statements. A prepared investor inspires confidence.

Private lenders often do their own due diligence, which may include driving by the property or reviewing your paperwork thoroughly. Be responsive and transparent throughout this process. This collaborative approach builds a strong working relationship.