Last updated: March 1, 2024
A Personal Financial Statement is a document that real estate investors applying for a loan provide to lenders in order to communicate their assets, liabilities, and income.
In many cases, the Personal Financial Statement is part of a loan application form that also includes legal questions.
The assets section of the personal financial statement is important because private lending to real estate investors is generally asset-backed. This is where the term hard money comes from, because the loan is backed in large part by real estate which is commonly referred to as a "hard asset".
The asset column will include:
The liabilities section of the personal financial statement is important because the private lender needs to understand what you owe in order to determine the degree of risk that they will not be able to recover the value of the loan you are applying for.
The liability column will include:
Net Worth = Assets - Liabilities
Your net worth is simply your total assets minus your total liabilities.
For example, if your assets are $10,000,000 and your liabilities are $5,000,000, then your net worth is $5,000,000.
Real estate private lenders such as OfferMarket Capital do not require salaried employment. This is a stark contrast to conventional mortgage lenders who generally require a W-2 and proof of employment.
Still, the lender will want to understand your income profile.
The income section will include:
Real estate private lenders will commonly ask the following questions to determine additional risk factors that can impact their ability to underwrite the loan.
Now it's time to see an example of a personal financial statement. For your reference, here is OfferMarket Capital's Personal Financial Statement template.
To download the Personal Financial Statement Excel template:
To download the Personal Financial Statement PDF template:
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