How We Underwrite a Deal at Emun Capital

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Why Underwriting Is the Product

Private real estate lending is often sold on the strength of its returns. But the real product is underwriting quality. Returns are a projection; underwriting is the process that determines whether that projection is based on sound analysis or optimism. At Emun Capital, we treat our underwriting process as the primary driver of investor capital protection. Here is exactly how we evaluate every loan request before making a commitment.

Step 1: Borrower Review

We start with the operator, not the asset. An experienced borrower with a track record of completed projects in the Las Vegas market is meaningfully less risky than a first-timer with a compelling spreadsheet. We review:

• Number of completed deals in the market
• Average renovation timeline vs. projected timeline
• Lender and contractor references
• Current pipeline and capital position

A borrower who has exited 10 Las Vegas flips on time is a fundamentally different credit risk than one who has not yet completed their first. We do not lend to borrowers whose track record we cannot verify.

Step 2: Property and Market Analysis

We independently assess the subject property's current condition, as-is value, projected renovation scope, and after-repair value. ARV is validated against recent comparable sales within a tight geographic radius, filtered for renovation quality and condition similarity. We do not accept borrower-supplied ARV figures without independent verification. The market sets the value, not the deal memo.

Step 3: LTV Calculation

Once we have a validated ARV, we apply our LTV limit. We do not originate loans above 90% of independently validated ARV. That 10% minimum equity buffer is the margin of safety that protects investor capital if a renovation runs over, the market moves, or the sale timeline extends. We also stress-test the LTV at a 10 to 15% ARV haircut to confirm that capital remains protected in a downside scenario.

We walk away from deals that do not pass our threshold. A higher-rate loan at an unsafe LTV is not a better deal. It is a riskier one.

Step 4: Renovation Scope Review

For fix-and-flip loans, we review the renovation scope in detail: itemized budget, contractor quotes, timeline, and contingency. Renovation overruns are the most common source of extension requests and project stress. We flag scopes that appear underbudgeted relative to the condition of the property or the market expectations for the target buyer.

Step 5: Exit Strategy

Every loan we originate has a defined exit strategy. For renovation loans, the exit is a sale at or near ARV within the loan term. We evaluate the absorption rate for comparable properties in the submarket, the days-on-market trend, and the borrower's listing and marketing plan. A deal where the exit strategy depends on a specific buyer at a specific price without market data supporting it does not pass our threshold.

If a deal does not pass all five steps, we do not originate it. That discipline is the core of what we are offering investors, not just a return number.