The Top Red Flags That Make Private Lenders Walk Away From a Deal

Sometimes it’s not the deal that kills the funding—it’s the way you present it.

Private lenders see dozens of pitches every week. They don’t have time to hand-hold or play detective. If something feels off, they walk—fast.

This post breaks down the top red flags that immediately turn off private lenders, so you can spot and fix them before sending your next pitch. Whether you’re new or experienced, avoiding these will make your deals more fundable, and your reputation stronger.

Let’s get into the things that quietly kill real estate deals—and how to avoid every single one.

Creative Ways Real Estate Investors Are Using Private Lending (Besides Fix-and-Flips)

1. Overhyped or Unrealistic ARVs (After-Repair Values)

The red flag:
Your ARV is way out of sync with local comps—or you just drop a number with no proof.

Why it matters:
Lenders base their risk on the property’s future value. If your ARV feels inflated, they’ll assume you don’t know what you’re doing—or you’re being careless with their money.

What to do instead:
✅ Always back your ARV with 2–3 solid comps
✅ Use conservative numbers based on sold listings, not just active ones
✅ Include photos and price/sq ft comparisons

2. Vague or Weak Exit Strategy

The red flag:
You say, “I’ll probably sell or maybe refinance, depending on how things go.”

Why it matters:
Lenders want a clear plan for getting repaid. If you don’t show how the deal closes, they won’t fund it.

What to do instead:
✅ Be specific: “Plan A is resale at $X within 90 days post-reno.”
✅ Have a Plan B: “If the market slows, I’ll refinance at 75% LTV into a 30-year DSCR loan.”
✅ Include a timeline that maps from close → rehab → sale/refi

3. Disorganized or Incomplete Financials

The red flag:
Your numbers are all over the place. The rehab budget is a guess. Holding costs aren’t mentioned. ROI is missing.

Why it matters:
This screams amateur. If the lender has to calculate your deal for you, it’s already a no.

What to do instead:
✅ Use a deal summary table that breaks down:

• Purchase price
  

• Rehab
  

• Holding costs
  

• Loan amount
  

• ARV
  

• Estimated profit: Attach a spreadsheet or PDF—never just dump numbers in the email body

4. No Risk Mitigation Plan

The red flag:
You pitch like the deal is bulletproof. No mention of what happens if costs go over or timelines stretch.

Why it matters:
Lenders aren’t scared of risk—they’re scared of borrowers who ignore risk.

What to do instead:
✅ Add a 10–15% contingency to your rehab
✅ Show awareness of market shifts, material delays, or labor shortages
✅ Explain how you’d adapt if Plan A doesn’t work out

5. Poor Communication or Sloppy Presentation

The red flag:
Your pitch is a long, messy paragraph with typos and missing info.
Or you ghost for days after they reply.

Why it matters:
Sloppy = careless. If you can’t communicate clearly, lenders assume you’ll drop the ball mid-deal.

What to do instead:
✅ Keep emails concise and formatted
✅ Send a clean PDF pitch deck or one-pager
✅ Respond within 24 hours—even if it’s just “Got it, I’ll follow up tomorrow.

6. Inexperienced Borrower With No Support Team

The red flag:
You’re new, and you’re going solo—with no GC, agent, or advisor in sight.

Why it matters:
Lenders fund execution, not enthusiasm. If you’re learning as you go without a support system, it’s too risky.

What to do instead:
✅ Acknowledge your inexperience—but highlight your team
✅ Bring in a contractor, partner, or mentor to vouch for your plan
✅ Show lenders: “I’m new, but I’ve de-risked this.”

7. Trying to Hide Weaknesses

The red flag:
You downplay issues—like bad plumbing, permit delays, or a thin margin—hoping the lender won’t ask.

Why it matters:
Lenders respect honesty. If they uncover something you should’ve disclosed, trust is broken.

What to do instead:
✅ Be upfront, but strategic
✅ “The home has foundation issues—we’ve got a bid from a licensed structural contractor, and we’ve added a 20% buffer.”

Own the problem and present the solution. That’s what makes you look professional.

8. Overleveraging or Asking for 100% Financing Without a Plan

The red flag:
You’re asking for the entire purchase + rehab + holding costs—and offering no skin in the game.

Why it matters:
Lenders want you to have something to lose. If you’re asking for 100% financing, you need to justify the why.

What to do instead:
✅ Bring 10–15% to the table if possible
✅ Or offer cross-collateral, partner capital, or deferred payment
✅ Pitch it as: “Here’s how I’m protecting your downside, even with minimal cash in.”

Conclusion

Most lenders don’t say no because the deal is bad.
They say no because the presentation raises too many flags.

Avoid these mistakes, and you instantly become more fundable:

• Be honest
  

• Be prepared
  

• Be clear
  

• Be realistic

At My Verified Investor, we connect real estate investors with private lenders who know what they’re doing—and expect the same from you.

Want to pitch clean, fundable deals lenders say yes to? Sign up today and start getting funding-ready the smart way.