In private lending, the numbers matter — but it’s how you get those numbers that truly defines the strength of a deal. At ZINC, one of the most important parts of our lending process is how we evaluate property value — both today’s value and its after-repair value (ARV). While traditional lenders rely heavily on static appraisals, we take a far more comprehensive, hands-on approach — one that combines data, experience, and boots on the ground. Here’s how it works.
1. The Role of Appraisals in Private Lending
An appraisal is more than a formality — it’s the foundation of loan security.
For us, the appraisal process determines how much we’re willing to lend, how we structure the deal, and what level of protection exists for our investors.
Every ZINC loan starts with a professional, third-party appraisal or broker price opinion (BPO) to establish the property’s current as-is market value. But unlike many lenders who stop there, we go further — because in private lending, the current condition often isn’t the full story.
2. Evaluating the After-Repair Value (ARV)
Our borrowers are typically investors — not owner-occupants — and their goal is to buy, renovate, and sell for profit.
That means the true measure of a property’s potential isn’t what it’s worth today, but what it will be worth after the improvements are complete.
That’s where After-Repair Value (ARV) comes in.
The ARV represents what the property is expected to sell for once the borrower finishes their renovation and lists it on the open market.
To determine ARV, our underwriters and local market experts analyze:
- Comparable Sales (Comps): Recent sales of similar homes within a tight radius — same square footage, age, lot size, and amenities.
- Market Trends: Supply, demand, and average days on market in that specific zip code.
- Scope of Work: A detailed renovation plan, including budgets, contractor bids, and photos of the property’s current condition.
- Quality of Finishes: The level of renovation directly impacts resale value. We compare the borrower’s proposed work with the finishes seen in top comps.
This ARV helps us understand both the property’s upside potential and the cushion of safety between our loan amount and the finished market value.
3. Loan-to-Value and Loan-to-Cost — Building a Safety Buffer
We don’t just look at what the property could be worth — we also look closely at what it will cost to get there.
That’s why we underwrite every deal with two critical metrics:
- Loan-to-Value (LTV): The loan amount divided by the property’s current appraised value.
- Loan-to-Cost (LTC): The loan amount divided by the borrower’s total cost basis (purchase + renovation).
At ZINC, our average LTV sits around 65%, and our LTC rarely exceeds 75%.
This means there’s built-in equity from day one — a protective buffer for both us and our investors.
If the market softens or a project runs over budget, that equity cushion keeps our capital safe.
4. Using Local Knowledge to Validate the Numbers
While appraisals and comps are essential, there’s no substitute for local knowledge.
We operate in the Central Valley of California — and our team lives, works, and invests here.
We’ve flipped hundreds of properties ourselves, so we know what values really look like street by street.
Before funding a loan, our team physically drives the neighborhood.
We check curb appeal, surrounding homes, and neighborhood trends — because sometimes, two homes on the same street can have drastically different outcomes based on pride of ownership or community standards.
This real-world visibility gives us a level of insight that software and data models simply can’t replicate.
5. Protecting Investors Through Accurate Valuations
Every accurate appraisal and ARV estimate ties back to one mission: protecting investor capital.
An inflated appraisal or overly optimistic ARV can lead to overexposure — lending too much against a property that might not perform.
We avoid that by requiring conservative valuations, independent verification, and hands-on oversight.
If a borrower defaults, that conservative underwriting pays off.
Our position as a first-position lender, combined with the equity cushion built into every loan, allows us to recover quickly — typically within 90 days — while preserving investor principal.
6. Why This Matters for Investors
For investors in the ZINC Income Fund, this process translates to stability and confidence.
Because our loan amounts are based on verified, realistic valuations — not projections or hype — our fund remains insulated from market volatility.
You’re not just investing in real estate loans. You’re investing in a disciplined system that prioritizes accuracy, transparency, and capital protection.
That’s why we’ve never had an investor lose principal.
It’s also why our returns remain consistent, even as other markets fluctuate.
In Summary
Appraisals and ARV analysis are more than lending tools — they’re the backbone of our risk management strategy.
By combining detailed data, local insight, and conservative underwriting, ZINC ensures that every loan we make is backed by real value — not speculation.
And for our investors, that means something priceless:
steady returns, secure capital, and the peace of mind that comes from lending with precision.