Financing

What documents a private money lender needs for due diligence

Private money lenders focus on the deal's viability and your ability to execute, so prepare a comprehensive package of property and project documents. This includes details on your exit strategy and projected financials, which are crucial for their assessment.

November 13, 2026 · 3 min read

The lender's perspective on risk

Private money lenders are primarily concerned with two things: the collateral (the property itself) and your ability to repay the loan. He or she will want to see that the property offers sufficient equity cushion and that your plan for the property is sound. This means your documentation needs to clearly support both aspects.

Unlike traditional banks, private lenders often prioritize speed and flexibility, but they still require thorough due diligence. Providing a complete, organized package upfront demonstrates your professionalism and reduces the time he or she needs to make a decision. Remember, this is not financial advice; always consult a professional for your specific situation.

Property-specific documents

Start with everything related to the property itself. This includes the purchase agreement, a recent appraisal or Broker's Price Opinion (BPO), and comparable sales data. The lender wants to verify the property's "as-is" value and its After Repair Value (ARV).

You should also provide a preliminary title report to show any liens or encumbrances. Photos of the property, especially those highlighting the condition and any deferred maintenance, are also important. The lender needs to understand exactly what he or she is lending against.

Project and rehab plan financials

If it's a fix-and-flip, a detailed scope of work and a rehab budget are non-negotiable. Break down costs clearly for materials and labor. This shows the lender you've thought through the project and helps him or her assess the total capital required.

Include a realistic project timeline. The lender needs to see a clear path to completion and sale. You should also present your projected holding costs, such as property taxes, insurance, and utilities, for the entire duration of the project.

Your experience and team details

Lenders want to know about your track record. If you have previous successful projects, provide a summary, including before-and-after photos, acquisition costs, rehab costs, and sale prices. This builds confidence in your abilities. If you are a new investor, highlight any relevant professional experience or mentors.

Introduce your team. Who is your general contractor, real estate agent, or attorney? Provide their contact information and a brief overview of their experience. A strong, experienced team can often mitigate a new investor's limited track record.

Proof of funds for skin in the game

Most private money lenders require you to have some of your own capital invested in the deal, often referred to as 'skin in the game'. You will need to provide proof of funds, typically a bank statement, showing you have the cash available for the down payment, closing costs, or any reserves required by the lender.

This demonstrates your commitment to the project and reduces the lender's risk. The amount required can vary, so always confirm this with your specific lender early in the process.

Legal and title considerations

Finally, be prepared to provide all necessary legal documents, such as your LLC operating agreement or corporate bylaws, if you are investing through an entity. The lender will want to ensure you have the legal authority to enter into contracts and borrow funds.

A clean title is paramount. Any unresolved title issues will need to be addressed before a private money lender will fund. This might involve working with a title company or real estate attorney to clear any clouds on title, like unreleased liens or probate issues. This is not legal advice, so consult with an attorney for specific guidance.

Questions people ask

Do I need to show my personal bank statements?

Yes, typically a private money lender will require bank statements to verify your available funds for the down payment or closing costs. This proves you have the required 'skin in the game' for the deal.

What if I am a new investor with no track record?

New investors should emphasize a strong, detailed rehab plan, comprehensive comps, and highlight any relevant professional experience or a mentor. Some lenders are open to funding new investors with solid deals and clear exit strategies.

How quickly can a private money lender close?

Private money lenders can often close much faster than traditional banks, sometimes in as little as a few days to two weeks. The speed largely depends on how quickly you provide all necessary due diligence documents and how clear the property's title is.