The Personal Financial Statement in Real Estate
In multifamily real estate, the numbers don’t just matter—they define your trajectory.
Whether you’re trying to close your first 12-unit or you’re scaling into 100+ unit deals, your financial credibility is critical. One of the most overlooked, but most powerful tools in your investing toolbox is the Personal Financial Statement (PFS).
This document does more than check a box for lenders. It communicates your financial strength, your ability to close, and your discipline as an operator. It’s your handshake before you ever step into the room.
In this guide, I’m going to walk you through everything you need to know about creating, understanding, and using your personal financial statement to open doors to more deals, better financing, and greater confidence as an investor.
If you’re serious about building a multifamily portfolio, this is a must-read.
What Is a Personal Financial Statement?
A Personal Financial Statement (PFS) is a snapshot of your financial position at a specific point in time. It shows what you own (assets), what you owe (liabilities), how much you’re earning, and how much you’re spending.
In simple terms: it’s your personal balance sheet and income statement rolled into one.
But in real estate, it’s one of the most important tools you have for:
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Securing financing
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Building credibility with brokers and sellers
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Tracking your net worth over time
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Making smart, strategic investment decisions
When you’re working on larger deals, lenders want proof that you and your partners have the financial strength to support the loan.
They use your personal financial statement for individuals to assess risk, confirm liquidity, and determine your ability to weather downturns.
Think of it this way: your PFS is your financial resume. The more complete, honest, and up-to-date it is, the more “bankable” you become.
Why Personal Financial Statements Matter in Multifamily Real Estate
Multifamily real estate is a high-stakes, relationship-driven business. The deals are bigger. The financing is more complex. And your reputation as an investor carries serious weight.
That’s why your personal financial statement (PFS) is more than a financial summary—it’s a credibility tool, a decision-making resource, and your ticket to scaling up.
Let’s break down why this document is absolutely essential if you’re serious about growing your multifamily portfolio.
It Builds Trust with Lenders
If you want to buy real estate, you’ll almost always need to borrow capital. And commercial lenders don’t lend based on emotion—they lend based on facts.
Your PFS helps them answer two questions:
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Do you have the financial capacity to support this deal?
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If things go sideways, do you have the liquidity and net worth to weather the storm?
In multifamily real estate, lenders often require:
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Net worth equal to or greater than the loan amount
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Post-closing liquidity equal to 10% of the loan amount
Let’s say you’re applying for a $5 million loan. The lending team will want to see:
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A net worth of at least $5 million (yours or your collective team’s)
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At least $500,000 in liquid assets remaining after the deal closes
And here’s the kicker: they may also want to know about any contingent liabilities—like personal guarantees or co-signs on other properties. A well-prepared PFS helps you demonstrate stability and transparency upfront.
It Strengthens Your Credibility with Brokers and Sellers
In competitive markets, brokers and sellers want one thing: confidence that you can close.
Many investors talk a big game. But very few show up with their financials dialed in. When you’re able to present a clean, professional PFS with your Letter of Intent (LOI), it sends a message: I’m not here to waste your time.
It also:
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Helps you win deals in multiple-offer situations
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Positions you as a serious buyer, not a speculator
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Gives brokers confidence to bring you off-market opportunities
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Speeds up underwriting when sellers ask for proof of funds
Don’t underestimate how powerful this is in a market where relationships can make or break your deal flow.
It Helps You Make Smarter Investment Decisions
Even if you’re not raising capital or buying a property right now, your PFS helps you manage your own portfolio with clarity.
By regularly updating your financial statement, you can:
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Track your net worth growth over time
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Identify cash flow leaks or debt imbalances
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Evaluate whether you’re overexposed in certain asset classes
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Spot when you’re financially ready for your next acquisition
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Compare financial scenarios when considering new investments
Most investors don’t fail because of lack of ambition. They fail because they didn’t understand their own numbers—until it was too late.
Your PFS gives you the visibility you need to invest from a place of strength, not guesswork.
It Positions You for Bigger Deals and Partnerships
As you scale in real estate, you’ll likely begin partnering with others to pool capital, meet lending requirements, or take down larger assets.
In these joint ventures and syndications, everyone wants to know what each partner brings to the table. And your personal financial statement shows exactly that.
It also helps:
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Clarify roles in a general partnership
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Speed up group underwriting with lenders
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Attract equity partners who want to see a track record of financial health
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Give your sponsors or co-guarantors confidence in your ability to perform
Remember: multifamily investing is a team sport. The better you know and can articulate your financial position, the more valuable a teammate you become.
How Lenders Use Your Personal Financial Statement
When you’re applying for a multifamily loan, your deal doesn’t just get underwritten—the lender underwrites you too.
Your personal financial statement (PFS) is the tool they use to assess your financial strength, risk profile, and overall ability to support the loan. Whether you’re going after a 12-unit property or a 300-unit acquisition, your PFS can make or break the financing process.
Let’s walk through exactly how lenders use this document and what you need to know to come prepared.
Lending Requirements: Net Worth and Liquidity
In multifamily financing, especially on commercial or agency loans (Fannie Mae, Freddie Mac, bridge lenders, etc.), there are two standard sponsor requirements:
1. Net Worth Equal to the Loan Amount
Let’s say you’re applying for a $4 million loan. Lenders want to see at least $4 million in net worth—either from you or the combined strength of all loan guarantors.
Why? Because they want reassurance that if the deal runs into trouble, someone on the loan has the resources to deal with it.
2. Post-Closing Liquidity of 10%
After your down payment, closing costs, and any rehab capital is spent, lenders want to know you’re not left running on fumes.
Standard requirement: 10% of the loan amount in liquidity after closing
So for that $4M loan, you’ll need $400,000 in cash or liquid assets remaining—not tied up in the property.
💡Pro Tip: Not all assets are treated equally. Stocks, checking accounts, and money markets count as liquid. Retirement accounts, crypto, or home equity usually do not.
Recourse vs. Non-Recourse Loans: Why Your PFS Matters More Than Ever
There are two main types of multifamily loans:
Recourse Loans
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Require a personal guarantee
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If the deal defaults, the lender can come after your personal assets
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Very common for smaller or regional bank loans
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Your PFS is absolutely critical in this scenario
Non-Recourse Loans
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No personal guarantee required
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The lender can only take back the property—not your house, car, or cash
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Offered on larger or agency-backed loans (Fannie, Freddie, CMBS)
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Even here, lenders will still require a PFS to vet sponsor strength
Bottom line: whether or not you’re personally guaranteeing the loan, your financial position always matters.
Understanding Contingent Liabilities
One of the most overlooked parts of a PFS—especially for active investors—is contingent liabilities.
These are obligations where you’re not currently paying, but you’ve guaranteed the debt:
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Other real estate loans where you’re a co-signer or guarantor
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Business loans where you signed personally
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Outstanding letters of credit
Why it matters: Lenders want to know you’re not overextended. If you’ve guaranteed multiple deals, they want to make sure those guarantees won’t become a burden if something goes sideways.
You’ll be asked to classify these liabilities into tiers:
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Unrealizable: Strong-performing assets with no risk of default
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Potentially Unrealizable: Some red flags, but stable
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Realizable: At-risk assets that could require you to step in
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Fully Realizable: Properties already in trouble
Smart investors keep detailed notes on every contingent liability and prepare to explain how each asset is performing.
Why Presentation Matters
Here’s the part most people miss: it’s not just about what your financial statement says, it’s how clearly and professionally it says it.
When you submit a clean, complete, and organized PFS:
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You reduce lender questions and delays
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You demonstrate professionalism and experience
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You accelerate underwriting
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You stand out in a crowded field of buyers
And let me tell you from experience—when lenders trust your documentation, they trust you. And that can be the difference between a fast close and a dead deal.
Anatomy of a Personal Financial Statement
A strong personal financial statement doesn’t just report numbers—it tells a story of your financial readiness, your discipline, and your ability to lead a deal with confidence.
Let’s break down the core components of a comprehensive PFS and what each one communicates to lenders, partners, and brokers.
A. Sponsor / Guarantor Information
This section covers the basics, but it still matters.
You’ll include:
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Full legal name
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Contact information
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Home address
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Employment or business affiliation
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Position or title
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Length of time in role
For real estate investors, include any entities (LLCs, partnerships) you’re affiliated with that relate to your investing activity.
If you’re submitting a personal financial statement for a partnership or loan guarantor group, each individual should fill out their own version—no combining details.
B. Assets
Your assets reflect the value of everything you own, broken down into two categories: liquid and long-term. Lenders focus heavily on this section to evaluate your financial stability and loan eligibility.
1. Liquid Assets (Highly Accessible)
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Cash in bank accounts: Checking, savings, money markets
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Securities owned: Stocks, mutual funds, ETFs
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Cash value of life insurance: Only policies with a surrender value
These assets show that you have readily available capital. This is where lenders calculate your liquidity post-close.
2. Long-Term Assets (Less Accessible, Still Valuable)
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Retirement accounts: 401(k), IRA, Roth IRA
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Notes receivable: Money owed to you by others
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Real estate owned: List all properties, values, and equity
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Primary residence
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Second home or vacation property
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Rentals
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Syndication or JV stakes (include % ownership)
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Private business interests: If you own companies or equity stakes
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Valuable personal property: Vehicles, art, collectibles (list only if material)
📌 Pro Tip: Use conservative estimates or third-party documentation for asset values. Inflated or unverifiable assets can backfire.
C. Liabilities
This section outlines everything you owe, your outstanding debts and obligations. It’s critical for determining your net worth and your risk profile.
Common liabilities include:
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Mortgages: On all real estate holdings
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Auto loans: Include balance and monthly payment
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Business loans: Any debt you’ve signed for
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Credit cards: Total current balances
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Student loans: Remaining balance
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Loans against retirement accounts or life insurance
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Lines of credit: Whether used or unused
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Any personal guarantees
Be thorough. Lenders want to see the full picture.
D. Net Worth Calculation
The formula is simple:
Net Worth = Total Assets – Total Liabilities
But the implications are huge.
Lender Benchmark: Net worth must equal or exceed the loan amount (across all guarantors).
E. Contingent Liabilities
Contingent liabilities are obligations you’ve agreed to guarantee, even if you’re not currently paying on them.
Common examples:
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Guarantees on other multifamily or business loans
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Co-signed credit or lines of credit
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Letters of credit issued in your name
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Legal obligations or settlements pending
Contingent liabilities should be categorized by likelihood:
Lenders will assess these risks carefully, especially if you’re involved in multiple deals.
F. Personal Income Statement (Cash Flow Summary)
This section reflects your monthly or annual income vs. expenses, giving a clear picture of your financial breathing room.
Income Sources:
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W-2 salary or self-employed earnings
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Rental income from real estate
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Business distributions
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Dividends, capital gains
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Pensions or annuities
Expense Categories:
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Mortgage payments (on all properties)
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Property taxes and insurance
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Loan payments (car, business, credit cards)
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Living expenses
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Alimony, child support, tuition
Net Cash Flow = Total Income – Total Expenses
Lenders look closely here. If your cash flow is negative, they’ll want to know why—and what your plan is to offset the loss.
G. Additional Financial Disclosures
This final section includes disclosures that can impact risk or underwriting decisions:
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Tax liens or outstanding obligations
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Bankruptcy filings (past or pending)
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Litigation or legal actions
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Outstanding letters of credit
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Pending divorces or settlements
Full transparency is always better than surprise follow-up questions during underwriting.
Need a blank financial statement? CLICK HERE for a sample personal financial statement template.
Why You Need a Personal Financial Statement
A personal financial statement is not just for lenders, its also a financial planning tool that helps individuals:
- Track net worth over time
- Identify strengths and weaknesses in personal finances
- Make smart investment decisions
- Stay financially prepared for real estate opportunities
Pro Tip: Update your personal financial statement annually to reflect current cash flow, assets, and liabilities.
Last Thoughts from Rod Khleif About the Personal Financial Statement
A personal financial statement isn’t just a document, it’s a powerful tool that separates successful investors from those who struggle to scale. If you’re serious about building wealth through real estate, this isn’t something you fill out once and forget. It’s a roadmap that helps you track your net worth, understand your financial position, and present yourself as a credible and bankable investor.
I’ve seen firsthand how having a well organized PFS opens doors to deals, secures financing, and builds trust with brokers, lenders, and partners. When you understand your financial standing inside and out, you make smarter investment decisions and position yourself to capitalize on opportunities before others even see them coming.
The real takeaway: your personal financial statement is a reflection of your financial discipline. If you’re not actively updating and reviewing it, you’re flying blind. Know your numbers, take control, and use this tool to fuel your real estate empire.
If you’re ready to level up your investment strategy, join me at my next Multifamily Bootcamp, where I’ll show you exactly how to structure your investments, finance deals, and scale with confidence. Let’s build something great together!
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