After about 15 years in hard money lending, one thing has become very clear to me:
The deals that hurt you usually don’t look dangerous when you’re doing them.
They look reasonable. They look fundable. They look like something you’ve done before. And that’s exactly why they get people in trouble.
Here are three real deals I passed on. All of them could have worked. All of them would have paid interest. And all of them had something about them that I’ve learned not to ignore.
1. The Refinance Where the Borrower Had No Real Skin in the Game
This one comes across my desk all the time.
Borrower wants to refinance an existing hard money loan. The current loan was already at about 70% LTV. That alone isn’t a deal killer. Refinances happen.
The problem was everything else.
The borrower had no liquidity. No meaningful reserves. And when we dug into how they got into the deal in the first place, their “equity” wasn’t even their own money. It came from a second-position lender.
So when people say, “The borrower has skin in the game,” I always ask a follow-up question: Whose skin?
Because if the borrower didn’t actually write the check, they don’t feel the risk the same way. When things get tight — and they always do at some point — they’re far more willing to hand you the keys and move on.
Hard money works best when incentives are clean and simple. The borrower should feel it before you do. When that structure is missing, the deal may still perform, but you’re relying on luck more than discipline.
I passed.
2. The Broker Who Suddenly Needed to Close “Fast”
This one still makes me laugh a little.
A broker brought us a deal where the borrower had purchased a property free and clear. They wanted a partial cash-out and a construction holdback. Good deal. Clean numbers. Borrower made sense. We issued a term sheet without hesitation.
Then the broker disappeared.
No calls. No emails. Just gone for a week.
Eventually I get a message saying the borrower went with another lender who could close fast. That was news to me, because speed had never come up as a concern — and we close extremely fast. Anyone who’s been in this business knows what that really meant. The deal got shopped and someone offered better terms. That’s fine. It happens. I just wish people would say it.
Here’s where it got interesting.
The day before their scheduled closing, the broker comes back. The new lender changed the terms at the last minute. No cash-out anymore. Now everyone’s scrambling and suddenly we’re getting rushed calls asking if we can jump back in.
That was an easy no.
Not because the deal was suddenly bad — but because the situation was. When terms start changing at the eleventh hour, that’s a warning sign. And when people come running back in a panic, it’s usually because something already went wrong.
I don’t like surprises, and I don’t risk investor money when red flags show up late in the process. Neither should you.
We passed and moved on.
3. The Deal That Was Great… Just Not Where We Lend
This one is simple and probably the hardest for newer lenders to walk away from.
It was a good deal. Solid borrower. Conservative leverage. Clean exit.
It just wasn’t in one of our markets.
This is where ego creeps in. You start telling yourself that real estate is real estate, that you understand the numbers, that you’ll figure it out. And maybe you will — until something goes sideways and you realize you don’t actually know how that local market behaves under pressure.
You don’t know how long things really sit. You don’t know how buyers react when rates move. You don’t know which exits dry up first. And when you’re forced to make decisions, you’re doing it without the instincts that come from seeing the same market over and over again.
Hard money is not the place to learn a new geography.
I passed without thinking twice.
The Part Most Lenders Miss
None of these deals failed. None of them defaulted. None of them turned into horror stories.
That’s exactly why they’re dangerous.
Most lenders don’t get hurt by obvious disasters. They get hurt by a series of small compromises that feel reasonable in the moment. Over time, the box gets looser, the standards drift, and one day you realize you’re taking risks you never meant to take.
If you’re a smaller lender reading this and thinking you’ve seen versions of these deals — you’re not alone. Most people have. The difference is whether someone is pressure-testing your decisions before the wire goes out.
That’s the value of experience in this business.
The goal isn’t to do more deals. It’s to still be doing deals years from now, with your capital and your reputation intact.
If you want a second set of experienced eyes on your lending, that’s usually a conversation worth having.
Hussien Skaiky is the founder and managing partner of Mayflower Venture Partners LLC, a direct hard money lender serving Massachusetts, Connecticut, Rhode Island, New Hampshire, and Maine.
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