It is possible?

Hello,
I want to buy a multifamily apartment complex in Dallas,TX. 85 units, 70% occupied and property needs in rehab $200k.
Purchase price $1.7mln.
I found a private lender who is ready to do the loan. 30 fixed, 6.9% interest rate, 10% down payment. He wants $6100 for the appraisal and inspection and if appraisal comes in right numbers and inspection will be good he can close in 72 hours. He told me what he can do appraisal and inspection in 5 days.
Can it be true or it's a scam?
Also, he force me wire him money. If he gets money by tomorrow
we can close by end of next week.
I need your opinions guys.
Thank you.

Edited: 06/26/2010 at 10:17AM by Mario Pau

Jon Holdman

Real Estate Investor · Denver, Colorado

11859 posts
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Icon_minipost Oct 28 '09, 09:21 AM

That seems like a very good deal on the loan. I too would be worried with his demand for wiring you money and having to do it very quickly. You would normally have to pay for an appraisal and inspection before you close, but its odd that you have to wire money for this to the lender. Combine that with the very attractive terms, and this smells a little fishy.

Edited: 06/26/2010 at 10:17AM

Jon Holdman, Flying Phoenix LLC

Eddie Ziv

Real Estate Investor · Studio City, California

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Icon_minipost Oct 28 '09, 10:05 AM

Unless you're willing to risk $6,100 you should slow down. Ask the lender for references, if this is a company, check their record with the BBB. I'd be very weary of any one who ask to wire the money right away. Also, ask who are the inspector and appraiser whom the lender work with and check with them about that lender. You may find out that they never heard of that lender.

Good luck

Edited: 06/26/2010 at 10:17AM

Mario Pau

Real Estate Investor · Los Angeles, California

49 posts
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Icon_minipost Oct 28 '09, 10:55 AM

Thank you guys.
Two red flags:
Terms are very good.
He wants to do everything very fast.
I will pass on this lender.

Edited: 06/26/2010 at 10:17AM

Account Closed

831 posts
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Icon_minipost Oct 28 '09, 11:02 AM

I wouldn't wire money anywhere except directly to an escrow company, appraiser and/or home inspection company.

TC

Edited: 06/26/2010 at 10:17AM by Account Closed

Jon Klaus

Real Estate Investor · Dallas, Texas

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Icon_minipost Oct 28 '09, 11:04 AM

That deal is just too good. Still, I'd check references, at least out of curiosity, and just maybe he is legit.

Also, you are the buyer, why don't you tell him you will get the appraisal and inspection from local reputable firms and see what he says. Or ask him who he is going to use and see if they know him.

Tell us more about the apartments....

Edited: 06/26/2010 at 10:17AM

Mario Pau

Real Estate Investor · Los Angeles, California

49 posts
200 Influence
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Icon_minipost Oct 28 '09, 01:31 PM

Hello,
I just spoke with the lender. He told me what they are 5 guys who are lending money. I asked what they company name. They don't have company. How you can lend money without company? Who I will be paying monthly payments to? If I default who will take property, somebody from them?
What do you think?
Thank you

Edited: 06/26/2010 at 10:17AM

Jon Holdman

Real Estate Investor · Denver, Colorado

11859 posts
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Icon_minipost Oct 28 '09, 01:39 PM

That's not too unusual. Many hard money lenders are individuals. Same happens in the commercial space, too. Either you'll be borrowing from just an individual, or two or more of them will create an LLC or corporation and it will lend to you.

Edited: 06/26/2010 at 10:17AM

Jon Holdman, Flying Phoenix LLC

Michael P.

Real Estate Investor · Dallas, Texas

72 posts
804 Influence
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Icon_minipost Oct 28 '09, 05:18 PM

Sounds bogus to me and you should tread with extreme caution.

They would at least have an LLC or some other entity formed. I don't buy it for one second they would not have some legal company formed.

I don't buy that 5 guys would get together and not have something written down about their own agreement with each other. You just don't jot this kind of stuff down on paper and tuck it under your bed.

Plus what is to keep this guy from just saying nope the deal sucks I will not be lending you money. Then just pocket your money.

Edited: 06/26/2010 at 10:17AM

Mario Pau

Real Estate Investor · Los Angeles, California

49 posts
200 Influence
1 Award

Icon_minipost Oct 29 '09, 01:38 AM

Thank you guys for help.
I need to find another lender.

Edited: 06/26/2010 at 10:17AM

Joshua Holiday

Banker · Westmont, New Jersey

69 posts
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Icon_minipost Oct 29 '09, 03:29 AM

If you are looking to go hard money with this deal then contact me

thanks

Edited: 06/26/2010 at 10:17AM