1. Define Your Ideal Borrower Profile

Before you evaluate anyone, know what you’re looking for.

• Experience level (e.g., 2+ completed deals, mentorship, licensed contractor)
• Deal type (flip, rental, BRRRR, new construction)
• Location and property type
• Communication style and professionalism
• Risk tolerance (credit score, LTV, collateral)

Tip: Create a borrower scorecard to stay consistent across deals.

2. Review Their Track Record

Past performance is a strong predictor of future behavior.

• Ask for a portfolio of past deals
• Request references from previous lenders or partners
• Verify business entity, licenses, and insurance
• Look for signs of integrity: Did they finish projects on time? Repay loans as agreed?

Tip: A first-time borrower isn’t a red flag—but lack of preparation is.

3. Conduct a Personal Interview

Trust is built through conversation.

• Ask how they handle delays, budget overruns, or market shifts
• Listen for clarity, honesty, and realism—not just enthusiasm
• Gauge their understanding of the numbers and exit strategy
• Ask about their team: contractors, agents, mentors

Tip: If they dodge questions or overpromise, pause before funding.

4. Evaluate the Deal Itself

Even great borrowers can bring bad deals.

• Is the ARV supported by comps?
• Is the rehab budget detailed and realistic?
• Is the timeline achievable?
• Is the LTV within safe limits (65–75%)?

Tip: Use your own deal checklist to stay objective.

5. Verify Legal & Financial Documents

Trustworthy borrowers are transparent.

• Review credit reports, income statements, and bank balances
• Confirm ownership and title status
• Require a signed promissory note and deed of trust
• Use a title company or attorney for closing

Tip: If they resist documentation, it’s a red flag.

6. Build Relationships, Not Just Transactions

The best borrowers become repeat partners.

• Stay in touch during the project
• Offer guidance when needed
• Celebrate successful exits
• Keep notes on their communication and performance

Tip: A borrower who respects your capital is worth funding again.