Most of what protects your money at 890 Capital happens before a single dollar goes out the door. It happens in underwriting: the unglamorous, checklist-driven work of deciding which loans we make and, just as often, which ones we turn down.

We get asked how we've stayed at zero foreclosures across 126 loans since inception. The honest answer is that we say no a lot. This is a plain-English look at how hard money loans are underwritten at 890, and the specific reasons a deal doesn't make it.

What underwriting actually means

Underwriting is the process of pricing and stress-testing a loan before you fund it. For a hard money lender, that means answering one question from a lot of angles: if everything goes wrong, does the property still cover the loan?

We are not underwriting the borrower's optimism or the glossy after-photos. We are underwriting the asset, the plan, and the exit. A hard money loan is short-term, secured by real property, and repaid when the borrower sells or refinances. So the property has to carry the loan on its own, today, at conservative numbers.

How hard money loans are underwritten at 890

Every deal we consider runs the same gauntlet before it gets a yes. This is how hard money loans are underwritten here, step by step.

First, position. We take a first-position mortgage on every loan, without exception. If a borrower defaults, first position means we are first in line on the collateral, not standing behind a bank or another lender. It is the single most important protection in the entire structure.

Second, loan-to-value. We cap every loan at 75% loan-to-value, and we routinely underwrite well below it. Our average across the book sits around 66%. That gap between what a property is worth and what we lend against it is the margin of safety.

Third, an independent read on value. We do not take the borrower's number. We pull comparable sales by hand, form our own opinion of current value, and take a conservative view of the after-repair value. A model tells you what a deal should return; standing in the house tells you whether it will.

Fourth, the borrower's track record and liquidity. We want to see that this operator has completed projects like this one and has the reserves to finish if the budget slips. A strong operator with room to maneuver is worth more than a thin file with a great story.

Fifth, the exit. Before we wire anything, we need a credible, funded way for the loan to be repaid: a realistic sale in a market we know, or a refinance the borrower can actually qualify for. No exit, no loan.

How we say no

The checklist above is also a filter, and it screens out more deals than it lets through. A few of the reasons a file gets a no:

The equity cushion is thin. If our loan sits too close to the property's real value, there is no room for us to be wrong, and there is always some chance we are wrong.

The value only works if the market keeps rising. We underwrite to today's comparable sales, not to a forecast. A deal that needs appreciation to pencil is a bet, not a loan.

The borrower is stretched across too many projects at once. Capital and attention are finite. An operator running six simultaneous rehabs is a different risk than one focused on two.

There is no credible, funded exit. If we cannot see how the loan gets paid back, the return does not matter.

It is a property or a submarket we cannot underwrite block by block. We lend only in the Charleston tri-county because we know it street by street. When we cannot form a confident view of value, we pass.

Why the boring version wins

The point of underwriting this way is not to make the most loans. It is to make loans that behave. First-position collateral, a conservative LTV, an independent value, a proven borrower, and a real exit combine into something predictable: monthly distributions paid on time since inception, and zero foreclosures across the book.

Discipline is the product. The deals you never see, the ones we turned down, are as much a part of the track record as the ones we funded. You can read our recent fund updates on the 890 Capital blog to see how that discipline shows up in the numbers over time, and you can learn more about the monthly-income model on our Easy Cashflow page.

A note on who this is for

890 Capital is a private real estate fund available to accredited investors under a Regulation D 506(c) offering. If you are not sure whether you qualify, the SEC lays out the accredited investor definition in plain terms at investor.gov. If you would like to see the full details of the offering and how to participate, you can request investor access.

For accredited investors only. Past performance does not guarantee future returns. See 890capital.com for full disclosures.