What Makes a Deal “Financeable” Even If the Numbers Are Tight?

What Makes a Deal “Financeable” Even If the Numbers Are Tight?

Member since 2025 · 111 posts · 56 votes

Not every deal is a home run on paper, yet some still get funded.

In your experience, what factors help a tighter deal still move forward?
Is it borrower strength, equity position, exit clarity, or something else?

Would love to hear how lenders and investors view this differently.

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  • Doug SmithPro Member
    Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
    10mo

    Hi Michael, I would have to know more about the type of deal your talking about...single-family, multi-family, rental, fix-n-flip, construction, etc. Ability (aka "Capacity" of the three C's) is typically what we lenders consider most important. If cash flow's tight on a DSCR of a rental property, more down will improve the cash flow typically. I often see in the forums "who here will go 85% on a DSCR?". Many if not most lenders will, but it's irrelevant if the payment exceeds PITI+HOA making the property not cash flow positive. Sure, you can do DSCRs below 1.0X, but the rate is significantly higher, so it kind of defeats the purpose. For a flip or spec construction, we want to see skin in the game, experience, clear comparables instead of "unique" properties, a robust market in the area for resale, and a clear and reasonable plan to exit the deal. When we look at a deal and it's a "just miss", we'll say "you know, if you do this and this, we can get this deal done." It varies from deal to deal and customer to customer. That's the perspective of a very "seasoned" (aka old) lender.

  • Benjamin AakerPro Member
    Rental Property Investor · Brandon, SD · Member since 2015 · 1k+ posts · 1k+ votes
    10mo

    I agree with @Doug Smith; the question needs clarification. To stay general - your question asks about financeable even though the numbers are tight. This implies you are looking at the cash flow. 

    Really, any way to mitigate risk would mean an investor could take less in upside, if he is looking for a place to park some money. Your example of exit clarity would fit this. Another one is the investor looking for long term equity build.  

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