What to Expect During a Property Inspection for a Private Loan

When you’re applying for a private loan — whether it’s a bridge loan, fix and flip loan, or construction financing — a key part of the underwriting process is the property inspection.

This step helps lenders evaluate the asset’s condition, marketability, and whether it supports the proposed loan structure.

So what exactly happens during a property inspection, and how can you prepare?

Why Do Private Lenders Conduct Inspections?

Unlike traditional lenders who may rely on automated valuation models or appraisals alone, private lenders often visit the property in person or hire a third-party inspector. Why?

Because in asset-based lending, the property is the primary source of repayment — either through sale, refinance, or continued cash flow.

Inspections help confirm:

• The property exists and matches the description
• Its current physical condition
• Renovation progress (if applicable)
• Whether there are signs of deferred maintenance or red flags

What Lenders Look for During the Inspection

Private lenders aren’t necessarily judging your design taste or tile choices. They’re looking at the structural and functional integrity of the asset — and how it fits with the loan request.

Here’s what they’ll assess:

• Exterior condition: Roof, foundation, siding, landscaping
• Interior condition: Flooring, walls, appliances, layout
• Health & safety issues: Mold, asbestos, water damage, broken systems
• Renovation status: If you’re mid-project, are things on track?
• Market factors: Location, neighborhood, comparable properties nearby

For construction loans, inspections are often used to approve draw requests, making them an ongoing part of the funding process.

How to Prepare for a Private Loan Inspection

Want the inspection to go smoothly and avoid delays? Here’s how to prepare:

1. Make the Property Accessible: If it’s vacant or tenant-occupied, make sure someone can provide access. Let tenants know in advance.
2. Tidy Up and Remove Hazards: The cleaner and more presentable the property, the easier it is to evaluate. Remove debris, secure pets, and clear entryways.
3. Have Renovation Plans Ready: If you’re submitting a value-add or fix and flip project, be prepared to walk through your renovation scope and progress.
4. Be Transparent: If there are issues (permits pending, backordered materials, old wiring), it’s better to disclose them than to hope they go unnoticed.
5. Bring Documentation: Budget, plans, permit status, contractor info — have everything organized to answer questions clearly.

Post-Inspection: What Happens Next?

After the inspection, the lender will typically:

• Review findings internally
• Confirm alignment with loan terms (LTV, renovation scope, exit plan)
• Adjust the loan structure if needed (e.g., holdbacks for repairs)
• Finalize approval and proceed to funding

Inspections don’t need to be stressful — they’re simply part of the due diligence to ensure a solid, workable loan for both parties.

Final Thought

A successful property inspection builds confidence for both borrower and lender. By preparing in advance and being transparent about your plans, you increase the likelihood of a fast, smooth funding process — and a project that stays on track from start to finish.

Disclosure: TaliMar Financial, Inc. dba TaliMar Financial, CA DRE License 01889802 / NMLS 337721. For information purposes only and is not a commitment to lend. Programs, rates, terms and conditions are subject to change at any time. Availability dependent upon approved credit and documentation, acceptable appraisal, and market conditions.