What Makes a Real Estate Deal Fundable?

The Core Elements of a Fundable Deal

Lenders evaluate deals across multiple dimensions. Understanding what makes a deal fundable helps you identify strong opportunities and structure deals for maximum approval odds.

Strong Cash Flow

The property must generate sufficient rental income to cover debt obligations with adequate cushion. DSCR of 1.25+ is ideal.

Good Condition

Property must be in rentable condition with no major deferred maintenance or safety issues requiring immediate attention.

Realistic Valuation

Purchase price or requested loan amount must be supported by comparable sales and appraisal analysis.

Qualified Borrower

Borrower meets minimum credit, experience, and reserve requirements for the chosen loan program.

Cash Flow Analysis

Cash flow is the #1 factor in DSCR and bridge lending. Here's what lenders analyze:

Income Calculation

• Current lease agreements (actual rent)
• Appraiser's market rent opinion
• Comparable properties in area
• Seasonal or occupancy adjustments

Expense Calculation

• Principal & Interest payment
• Property taxes
• Insurance
• HOA fees (if applicable)
• Management and maintenance (25-30% of rent)

Property Characteristics That Strengthen Deals

Located in strong rental markets with low vacancy
Property type in high demand
Recent updates or renovations documented
Clean title with no encumbrances
Tenant in place with lease at market rent
Low maintenance property (newer construction, solid condition)
Good comps supporting valuation

Borrower Characteristics That Strengthen Deals

Credit score 700+ (demonstrates financial responsibility)
Real estate investment experience
Substantial liquid reserves (12+ months preferred)
Clean payment history on investment properties
Adequate down payment (20-25%)
Professional approach and responsiveness

Red Flags That Hurt Fundability

• DSCR below 1.0 without strong compensating factors
• Purchase price significantly above comps
• Property in declining market or high-crime area
• Major deferred maintenance or code violations
• Recent mortgage lates or investment property defaults
• Insufficient reserves for property type
• Unrealistic rent estimates not supported by market

Pre-Screen Your Deals

Before going under contract, run preliminary numbers to ensure the deal is fundable. Calculate DSCR, verify your reserves meet requirements, and confirm the purchase price is supported by comps. This prevents wasted time and earnest money on deals that won't close.