Private Lenders Now Care More About You Than Your Property

Written by:

Alejandra Rodriguez

Date:

04 Aug 2026

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A decade ago, a real estate investor seeking a private bridge loan needed one thing: a property with enough equity. The building was the security, and that was sufficient. Today, private lenders who have absorbed years of defaults and litigation say they have inverted that priority. The borrower’s credit history, track record, and transparency now carry as much weight as the collateral, and for investors without those credentials, fast capital is harder to access than it used to be.

Boris Dorfman, Founder & Fund Manager of LBC Capital Income Fund, a California-based private real estate debt fund operating for roughly 15 years. He describes the shift as one learned through experience rather than theory.

From Property-first to People-first

When Dorfman started lending, a borrower brought a property with enough equity and the loan got made. The real estate was the security. Experience taught a different lesson. “Real estate rarely gives you problems,” Dorfman says. “People give you problems all the time.”

The shift accumulated through defaults where the property was sound but the borrower disappeared, fought foreclosure, or misrepresented their plans. Over time, LBC Capital moved from an equity-driven model to one where the borrower’s credit score, track record, and transparency determine whether a deal gets funded.

What Lenders Now Screen For

For borrowers approaching private lenders in mid-2026, the bar has risen. Dorfman describes his typical borrower as an experienced real estate operator with a FICO score of 660 or above. First-time investors and casual flippers without a track record are largely screened out.

For seasoned investors with multiple completed projects and strong credit, private capital remains accessible, often on timelines as short as three to seven business days. But for newer investors, the door that once opened on equity alone may now be closed regardless of how much equity they bring.

The transparency requirement extends beyond the borrower to referral sources. LBC Capital operates primarily through a B2B model, working with brokers and real estate professionals who send deals. Dorfman requires those brokers to present everything openly – what the borrower’s real estate looks like, what they are buying, how they plan to repay, and why they need the money. If that transparency is missing, the relationship ends.

When the Borrower is Strong

The people-first approach does not mean lenders ignore financial constraints; it means they solve problems differently for borrowers they trust. Dorfman describes a recent deal in Newport Beach, California, where an experienced developer needed to close on a seven-day contract but had almost no liquid cash. The developer had a 700-plus FICO score, extensive experience, and a paid-off primary residence, but not the down payment in a bank account.

Rather than declining the loan, LBC Capital structured two simultaneous loans: one to purchase the investment property, and a second against the borrower’s primary residence to generate the down payment. The borrower’s track record and creditworthiness made that structure possible. A first-time investor with the same liquidity problem would not have received the same treatment.

The Barrier For Newer Investors

This tightening creates a genuine obstacle for people trying to enter real estate investing through private lending. The equity-driven era meant a strong deal could compensate for a thin resume. Today, even a property with excellent fundamentals may not get funded if the person behind it lacks the credit history and experience lenders now demand.

For anyone considering their first investment property and assuming that private or hard-money lending is the accessible alternative to bank financing, the screening now includes FICO scores, prior project completions, and what Dorfman describes as an evaluation of “previous problems,” not just previous successes.

A Slower Market Compounds the Shift

The current environment reinforces these stricter standards. According to Dorfman, the market has slowed considerably, with political uncertainty and elevated interest rates making real estate investors cautious. He sees capital waiting on the sidelines – both individual and institutional – but few people willing to deploy it without clearer direction on rates and policy.

One consequence: the urgency that once drove borrowers to private lenders has diminished. Dorfman says sellers who previously held firm on seven-day closing deadlines are now granting 30-day extensions. Buyers who might have lost a deal for moving slowly are now getting more time. That reduced time pressure means fewer borrowers need the speed that private lenders charge a premium to provide, and the borrowers who do come through the door face tighter scrutiny on thinner margins.

Dorfman says flippers and developers now operate on profit margins that leave almost no room for error. A million-dollar purchase with a $200,000 rehab might yield $70,000 to $80,000 in profit, and that disappears if the project runs a month or two over schedule or materials costs rise unexpectedly.

For private lenders, that environment means more deals that do not pencil out and more borrowers backing away mid-transaction. For borrowers, it means the combination of tighter underwriting standards and compressed margins has made private lending a tool that works best for experienced operators with strong credit, and works poorly, or not at all, for everyone else.

About the Expert: Boris Dorfman is founder and fund manager of LBC Capital Income Fund, a California-based private real estate debt fund operating for approximately 15 years with a focus on bridge lending across residential and commercial real estate.

This article is intended for informational purposes only and does not constitute legal, financial, or investment advice. The views and opinions expressed herein reflect those of the individuals quoted and do not represent an endorsement of any company, product, or service mentioned. Readers should conduct their own due diligence and consult qualified professionals before making any investment decisions.