What Makes a ‘Good Deal’ to a Private Lender?

Question

For those who’ve worked with private lenders or funding partners, what do they usually want to see before committing?

Numbers? Experience? Exit strategy?

I’d love to hear your insights on what builds lender confidence.

Mike Klarman · Answer

Proven strategy that works.  Proven team that delivers.  If this is your first time working with a contractor or first purchase in a market then I'd say.  They don't wanna hear that it's a "first" and you're not sure what you're getting.

Speed of exit as well. Do your projects take 9 months or 5?

I've had hundreds of deals under my nose, and lots of them worked on paper and in any calculator.  And even then, the x factors can cause it to be a disaster so even if the project is good on paper this is still very EXECUTION DEPENDENT.  You can get the numbers to work in theory all you want, but real world laugh scenarios laugh at theory.

Michael Calvey · Answer

This is a question that trips up a lot of investors because they focus on convincing the lender rather than just presenting a deal that speaks for itself.

I've been on both sides of this (borrowing and lending), and honestly? One private lender on these forums said it best: "The 'pitch' is simply the deal and the borrower. If the numbers work, and the borrower has good credit and experience, I lend. There's no magic formula—the numbers speak for themselves."

That said, here's what I've learned actually moves the needle:

• A deal with a margin of safety (low LTV, realistic numbers)
• A borrower they trust (experience or credibility signals)
• A clear path to getting paid back (exit + backup exit)
• Professional presentation (you've done the homework)
• Fair terms (they're taking risk—make it worth their while)

Nail those five, and the conversation gets a lot easier.1. The Numbers Have to Be Bulletproof

Private lenders aren't gamblers. They want to see:

• Purchase price + rehab budget + ARV (with real comps, not Zillow estimates)
• Loan-to-Value (LTV) — Most want to stay under 65-70% of ARV. That's their margin of safety if things go sideways.
• Holding costs — Interest, taxes, insurance, utilities during the project. A lot of borrowers forget this.
• Your equity — Are you putting skin in the game, or asking for 100% financing? Lenders notice.

The easiest way to present this professionally is to run your deal through the BP Calculators—especially the Fix and Flip Calculator or BRRRR Calculator. Pro members can export these as printable reports, which is exactly what lenders want to see. It shows you've done real analysis, not napkin math.2. Experience Matters (But It's Not Everything)

If you've done deals before, show them. A simple track record—even 2-3 completed flips or rentals—goes a long way.

If you're newer, you can offset this by:

• Partnering with someone experienced
• Having a solid GC relationship (show their credentials)
• Starting with hard money first to build a track record, then transitioning to private money once you've proven yourself

One investor here mentioned using hard money early on was "a great way to close deals quickly and prove that I could handle rehabs, properties, and capital"—which then made private lenders comfortable.3. A Clear Exit Strategy (With a Backup)

Lenders want to know when and how they get paid back. For a flip, that's obvious—sell the property. For BRRRR, it's the refinance.

But the smart move is to also have a backup exit: What if the market softens? What if the rehab runs over? Can you rent it out and hold? Can you sell at a lower price and still pay them back? Showing you've thought through the "what ifs" builds serious confidence.4. Professional Presentation

You don't need a 40-page deck, but a clean one-pager with:

• Property address + photos
• Purchase price, rehab budget, ARV
• Scope of work with contractor bids
• Timeline
• Loan terms you're offering (rate, points, first lien position)
• Your exit strategy

This separates you from 90% of people asking for money. When you sit down with a potential lender, staying businesslike ensures you're taken seriously as it shows them why they should invest with you.5. The Terms You're Offering

Remember, you're also selling an investment opportunity to the lender. What's in it for them?

• What interest rate and points are you paying?
• First lien position? (Critical—most private lenders won't do second position)
• What's the term? 6 months? 12 months?
• Personal guarantee?

Industry standard for private money is often 8-12% interest + 1-2 points depending on the deal and relationship. Our BiggerPockets book, Lend to Live (written from the lender's perspective) is great for understanding how lenders evaluate these terms.

A few BP resources that directly answer your question:

• BP Calculators — Run your deal through these and export reports. This is your "proof of work" for lenders.
• Investor-Friendly Lender Finder — If you want to connect with hard money or private lenders who already work with investors, this matches you based on your deal type and market. Good for building relationships or finding bridge financing.
• Raising Private Capital by Matt Faircloth — This is the book on this topic. Matt has raised $30M+ in private capital and breaks down everything from finding lenders to structuring deals to staying SEC-compliant. If you're serious about private money, it's a must-read.
• Lend to Live by Alex Breshears & Beth Johnson — Flip side of the coin. Written for people who want to become private lenders, but incredibly useful for understanding what lenders actually look for. Once you see it from their perspective, your pitch gets way better.
• How to Find Private Money Lenders — Good blog post breaking down the "three circles" of people to approach (family/friends, network, professionals) and how to approach each.

Good luck and feel free to post a deal here for feedback. Sometimes fresh eyes catch things you've missed.