Newbie how do I Screen Private Lenders so I don't get Scammed

4 Replies

I obtained an offer on social media after I marketed a property. A individual commented on my post stating he was a private lender and that he is a national private lender and offer me a great really great percentage for using his money. What is crazy is that I have been hoping to find private lenders. The universe works in mysterious ways.

However, I was wondering if you never have dealt with a private lender, how do you screen them so you know that they are legit. I don't personally know anyone that know this guy. All assistance on the is welcomed with open arms.

Peace be unto you,

Ivy

Do NOT trust anyone trying to lend or give you money on social media or anywhere on the internet. NEVER. EVER.

Go to your local investor clubs and meet some lenders there. Network with other investors and ask them who they have used. Use referred lenders. Most of these scammers on the internet will tell you everything that you want to hear and then ask you for $200 or $450 for an appraisal fee. Once you pay the "appraisal fee" or "processing fee", that will be the last time that they take your call if you even have a phone number for them.

unfortunately 99.9% of private lenders are frauds @Rick Pozos as Rick stated.. true private lenders don't advertise on social media.. and just look at it logically is some private lender going to lend you money at rates that are as low or lower than a bank... ???? Same with the private lenders that hit you on BP 90%of them are frauds.. this area of real estate is all relationship based .. and personal belly to belly transactions.. and there are NO national private lenders first off U need NMLS licesne in 12 states to lend legally.. ( lot of HML don't know this but soon find out when they get in trouble.) there are far and few companies that are TRUE national lenders.. and NO real private lenders that are.. that would require NMLS and licesnes in those states.. Like TN U need a special license on top of NMLS to lend there legally.

Originally posted by @Ivy Hailey :

I obtained an offer on social media after I marketed a property. A individual commented on my post stating he was a private lender and that he is a national private lender and offer me a great really great percentage for using his money. What is crazy is that I have been hoping to find private lenders. The universe works in mysterious ways.

However, I was wondering if you never have dealt with a private lender, how do you screen them so you know that they are legit. I don't personally know anyone that know this guy. All assistance on the is welcomed with open arms.

Peace be unto you,

Ivy

Hello, Ivy,

"national private lender" is somewhat of a contradiction in terms. To be fair, though, there are really two kinds of "private" lenders ...

The "national private lender" variety aren't really private lenders, they're actually hard money lenders lending out either their own or borrowed money to "anyone who asks". SEC grey area. They make a profit by lending money - it's a business for them.

TRUE private lenders are people who do not make it their business to lend out money. These are people you know - family, friends, neighbors, etc. - who have retirement accounts and such where they' looking for better, safer returns than they can get in the stock or bond markets or the secondary money market. The key here is the existing relationship you either have or can establish with them to draw their interest in your deals, business, etc.

Hope this helps ...