Private lending can deliver strong, real-estate-backed returns — but only if you underwrite each deal properly. Here’s the framework experienced lenders use.
Loan-to-value (LTV)
The single most important number. Lending at 65–75% of the after-repair value gives you a cushion: even if the project stumbles, the property can be sold to recover your principal.
The exit strategy
How and when do you get paid back — a sale, a refinance, a rental? A clear, realistic exit with a defined timeline matters more than an optimistic projection.
The borrower’s track record
You’re lending to a person as much as a property. Look for a documented history of completed projects, references, and transparency. A seasoned operator who communicates well is worth a slightly lower headline return.
This is general education, not financial advice — always do your own due diligence.
