This Blows My Mind For Those Acting A A Lender
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
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This Blows My Mind For Those Acting A A Lender
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
2yQuote from @Chris Seveney:
Ok so this is something that honestly just completely blows my mind and I’m curious if I am the only one that is completely nuts or do others agree with me?
I continue to see more and more investors, either doing private, lending or investing in debt, not take into consideration the risk.
What do I mean by that? I am seeing people investing in opportunities where they are in a second or even unsecured position and are targeted to receive a net 1-2% above a 1st position lien.
For example,:
Option #1:
You receive a $50k first position lien $100k property - you are targeting to get a 9% return.
Option #2:
You are in 2nd position on the above deal and are $50k so 100% ltv and you are targeting to get 10%
Option #3:
you give someone $50k and it unsecured for them to go out and buy an asset and you are targeting to get 13%.
I have literally seen several people over the last few days say they’re going to go option three because it provides the highest return. So curious if people think I’m nuts? We view the risk of a 2nd and would add 3-5% higher (min) for the risk and unsecured we would not even touch, but I would put it at 2x a second.
Curious to hear how others evaluate risk?
Also, if you know somebody who selected option number three and lost 100% of their money, would you feel bad for them?
Is this any different than similar investors chasing yield in Cleveland, Kansas City or Baltimore over investing in Boston, DC or LA?
I said it 10 years ago when I was on the BP podcast, and it remains true today....the biggest mistake investors make is an inability to properly judge risk.
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40 Replies
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Alex Breshears:
I can’t tell you how happy I am that you stood your ground! I’ve seen this before and so many people just bend to their will. I have done transactional funding - but I still underwrite the deal as if they would keep it on the off chance they can’t get the end buyer to exercise and actually close. You did the right thing!Quote from @Becca F.:
Someone on BP messaged me about doing transactional lending and a double close. I spoke with him on the phone and he asked me if I could help fund his deal for $91,000 and it would be wired to a title company. He would pay me 7% and I would get the money back in 24 hours, 48 hours at the most. He does his sales pitch about loaning him $100,000 and doing multiple deals in a month and I could supposedly make $30,000 a month by doing 10 deals a month.
I told him I wanted to research this. I've never met this guy - he's out of state in Florida, says he's a licensed realtor. He sent me the purchase agreements for these properties. The title company emails me paperwork thinking I'm going to loan him over $200,000 for 2 properties... absolutely not. Then lots of high pressure, promises me 10% then 12% if I can fund his deal or find someone else. I have no idea if this title company is legit. They have a website. I could throw up a site and say I'm XYZ business.
I guess some people make money doing transactional lending but this whole scenario sounded shady. If it was someone in the Bay Area I could meet in person, may be worth considering but someone over 2000 miles away, hard pass. Making $30,000 a month.... come on.... I have a bridge to sell you in Alaska.
No matter what - you have them sign your documents that you had your attorney create for you. Do not use someone else’s docs - ever. You don’t know if they are legal in that state or even protect you as the lender. It’s critical you know your docs and are familiar with your terms in those documents. Don’t fall to the pressure tactics. Stick to your guns and your gut!this industry is very scary
- 2yIan WalshBusiness MemberLender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
2nd position lending and unsecured lending are way different and riskier than 1st position lending. Any form of lending can make money but the risk model has to be really really conservative with unsecured and 2nd positions.
- 2yAlex BreshearsBusiness MemberLender · Springfield, MO · Member since 2020 · 351 posts · 504 votesI think any industry is going to face issues with people trying to game the system or just outright commit fraud or take advantage of others. I don’t think this is exclusively a private lending problem. It’s seen in every industry in every trade unfortunately.
Quote from @Carlos Ptriawan:
Quote from @Alex Breshears:
I can’t tell you how happy I am that you stood your ground! I’ve seen this before and so many people just bend to their will. I have done transactional funding - but I still underwrite the deal as if they would keep it on the off chance they can’t get the end buyer to exercise and actually close. You did the right thing!Quote from @Becca F.:
Someone on BP messaged me about doing transactional lending and a double close. I spoke with him on the phone and he asked me if I could help fund his deal for $91,000 and it would be wired to a title company. He would pay me 7% and I would get the money back in 24 hours, 48 hours at the most. He does his sales pitch about loaning him $100,000 and doing multiple deals in a month and I could supposedly make $30,000 a month by doing 10 deals a month.
I told him I wanted to research this. I've never met this guy - he's out of state in Florida, says he's a licensed realtor. He sent me the purchase agreements for these properties. The title company emails me paperwork thinking I'm going to loan him over $200,000 for 2 properties... absolutely not. Then lots of high pressure, promises me 10% then 12% if I can fund his deal or find someone else. I have no idea if this title company is legit. They have a website. I could throw up a site and say I'm XYZ business.
I guess some people make money doing transactional lending but this whole scenario sounded shady. If it was someone in the Bay Area I could meet in person, may be worth considering but someone over 2000 miles away, hard pass. Making $30,000 a month.... come on.... I have a bridge to sell you in Alaska.
No matter what - you have them sign your documents that you had your attorney create for you. Do not use someone else’s docs - ever. You don’t know if they are legal in that state or even protect you as the lender. It’s critical you know your docs and are familiar with your terms in those documents. Don’t fall to the pressure tactics. Stick to your guns and your gut!this industry is very scary
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes2y
Quote from @Alex Breshears:
I think any industry is going to face issues with people trying to game the system or just outright commit fraud or take advantage of others. I don’t think this is exclusively a private lending problem. It’s seen in every industry in every trade unfortunately.Quote from @Carlos Ptriawan:
Quote from @Alex Breshears:
I can’t tell you how happy I am that you stood your ground! I’ve seen this before and so many people just bend to their will. I have done transactional funding - but I still underwrite the deal as if they would keep it on the off chance they can’t get the end buyer to exercise and actually close. You did the right thing!Quote from @Becca F.:
Someone on BP messaged me about doing transactional lending and a double close. I spoke with him on the phone and he asked me if I could help fund his deal for $91,000 and it would be wired to a title company. He would pay me 7% and I would get the money back in 24 hours, 48 hours at the most. He does his sales pitch about loaning him $100,000 and doing multiple deals in a month and I could supposedly make $30,000 a month by doing 10 deals a month.
I told him I wanted to research this. I've never met this guy - he's out of state in Florida, says he's a licensed realtor. He sent me the purchase agreements for these properties. The title company emails me paperwork thinking I'm going to loan him over $200,000 for 2 properties... absolutely not. Then lots of high pressure, promises me 10% then 12% if I can fund his deal or find someone else. I have no idea if this title company is legit. They have a website. I could throw up a site and say I'm XYZ business.
I guess some people make money doing transactional lending but this whole scenario sounded shady. If it was someone in the Bay Area I could meet in person, may be worth considering but someone over 2000 miles away, hard pass. Making $30,000 a month.... come on.... I have a bridge to sell you in Alaska.
No matter what - you have them sign your documents that you had your attorney create for you. Do not use someone else’s docs - ever. You don’t know if they are legal in that state or even protect you as the lender. It’s critical you know your docs and are familiar with your terms in those documents. Don’t fall to the pressure tactics. Stick to your guns and your gut!this industry is very scary
The promissory note didn't even look like it was written up by an attorney. He probably wrote it up on a MS Word or Google Doc, no notary seal or anything to certify his identity and uploaded it to DocuSign "Name of person promise to pay Becca F. the sum of $$$$..... The note shall be referred after default to an attorney at law for collection if....." I just thought the urgency for me to sign it the increasing the percent he was going to give me was a huge red flag - I'm not signing anything without an attorney reviewing it.
It was DocuSigned by him and the title company rep, like that's supposed to make it all legal and official. I think the "title company rep" is part of his whole scheme. I hope someone else didn't fall for this.
- 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Becca F.:
Quote from @Alex Breshears:
I think any industry is going to face issues with people trying to game the system or just outright commit fraud or take advantage of others. I don’t think this is exclusively a private lending problem. It’s seen in every industry in every trade unfortunately.Quote from @Carlos Ptriawan:
Quote from @Alex Breshears:
I can’t tell you how happy I am that you stood your ground! I’ve seen this before and so many people just bend to their will. I have done transactional funding - but I still underwrite the deal as if they would keep it on the off chance they can’t get the end buyer to exercise and actually close. You did the right thing!Quote from @Becca F.:
Someone on BP messaged me about doing transactional lending and a double close. I spoke with him on the phone and he asked me if I could help fund his deal for $91,000 and it would be wired to a title company. He would pay me 7% and I would get the money back in 24 hours, 48 hours at the most. He does his sales pitch about loaning him $100,000 and doing multiple deals in a month and I could supposedly make $30,000 a month by doing 10 deals a month.
I told him I wanted to research this. I've never met this guy - he's out of state in Florida, says he's a licensed realtor. He sent me the purchase agreements for these properties. The title company emails me paperwork thinking I'm going to loan him over $200,000 for 2 properties... absolutely not. Then lots of high pressure, promises me 10% then 12% if I can fund his deal or find someone else. I have no idea if this title company is legit. They have a website. I could throw up a site and say I'm XYZ business.
I guess some people make money doing transactional lending but this whole scenario sounded shady. If it was someone in the Bay Area I could meet in person, may be worth considering but someone over 2000 miles away, hard pass. Making $30,000 a month.... come on.... I have a bridge to sell you in Alaska.
No matter what - you have them sign your documents that you had your attorney create for you. Do not use someone else’s docs - ever. You don’t know if they are legal in that state or even protect you as the lender. It’s critical you know your docs and are familiar with your terms in those documents. Don’t fall to the pressure tactics. Stick to your guns and your gut!this industry is very scary
The promissory note didn't even look like it was written up by an attorney. He probably wrote it up on a MS Word or Google Doc, no notary seal or anything to certify his identity and uploaded it to DocuSign "Name of person promise to pay Becca F. the sum of $$$$..... The note shall be referred after default to an attorney at law for collection if....." I just thought the urgency for me to sign it the increasing the percent he was going to give me was a huge red flag - I'm not signing anything without an attorney reviewing it.
It was DocuSigned by him and the title company rep, like that's supposed to make it all legal and official. I think the "title company rep" is part of his whole scheme. I hope someone else didn't fall for this.
Lender can sign the prom note but its not necessary also Prom notes can be notarized but most are not. making unsecured loans to someone you met on the internet or on BP is foolish to the extreme to even entertain it. Also unsecrued Prom notes are very short and to the point usually no more than one or two small paragraphs so I can see how you would get the impression that it did not look right and I am confused about signed by title company rep that would NEVER happen so thats weird right there. Can you forward a copy of this to me on DM I would like to see what it looks like and I can give you feedback if you wish of course. - Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes2y
Quote from @Jay Hinrichs:
Quote from @Becca F.:
Quote from @Alex Breshears:
I think any industry is going to face issues with people trying to game the system or just outright commit fraud or take advantage of others. I don’t think this is exclusively a private lending problem. It’s seen in every industry in every trade unfortunately.Quote from @Carlos Ptriawan:
Quote from @Alex Breshears:
I can’t tell you how happy I am that you stood your ground! I’ve seen this before and so many people just bend to their will. I have done transactional funding - but I still underwrite the deal as if they would keep it on the off chance they can’t get the end buyer to exercise and actually close. You did the right thing!Quote from @Becca F.:
Someone on BP messaged me about doing transactional lending and a double close. I spoke with him on the phone and he asked me if I could help fund his deal for $91,000 and it would be wired to a title company. He would pay me 7% and I would get the money back in 24 hours, 48 hours at the most. He does his sales pitch about loaning him $100,000 and doing multiple deals in a month and I could supposedly make $30,000 a month by doing 10 deals a month.
I told him I wanted to research this. I've never met this guy - he's out of state in Florida, says he's a licensed realtor. He sent me the purchase agreements for these properties. The title company emails me paperwork thinking I'm going to loan him over $200,000 for 2 properties... absolutely not. Then lots of high pressure, promises me 10% then 12% if I can fund his deal or find someone else. I have no idea if this title company is legit. They have a website. I could throw up a site and say I'm XYZ business.
I guess some people make money doing transactional lending but this whole scenario sounded shady. If it was someone in the Bay Area I could meet in person, may be worth considering but someone over 2000 miles away, hard pass. Making $30,000 a month.... come on.... I have a bridge to sell you in Alaska.
No matter what - you have them sign your documents that you had your attorney create for you. Do not use someone else’s docs - ever. You don’t know if they are legal in that state or even protect you as the lender. It’s critical you know your docs and are familiar with your terms in those documents. Don’t fall to the pressure tactics. Stick to your guns and your gut!this industry is very scary
The promissory note didn't even look like it was written up by an attorney. He probably wrote it up on a MS Word or Google Doc, no notary seal or anything to certify his identity and uploaded it to DocuSign "Name of person promise to pay Becca F. the sum of $$$$..... The note shall be referred after default to an attorney at law for collection if....." I just thought the urgency for me to sign it the increasing the percent he was going to give me was a huge red flag - I'm not signing anything without an attorney reviewing it.
It was DocuSigned by him and the title company rep, like that's supposed to make it all legal and official. I think the "title company rep" is part of his whole scheme. I hope someone else didn't fall for this.
Lender can sign the prom note but its not necessary also Prom notes can be notarized but most are not. making unsecured loans to someone you met on the internet or on BP is foolish to the extreme to even entertain it. Also unsecrued Prom notes are very short and to the point usually no more than one or two small paragraphs so I can see how you would get the impression that it did not look right and I am confused about signed by title company rep that would NEVER happen so thats weird right there. Can you forward a copy of this to me on DM I would like to see what it looks like and I can give you feedback if you wish of course.Jay I sent you a DM with the attachments. Thanks for your feedback.
- 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Becca F.:
Quote from @Jay Hinrichs:
Quote from @Becca F.:
Quote from @Alex Breshears:
I think any industry is going to face issues with people trying to game the system or just outright commit fraud or take advantage of others. I don’t think this is exclusively a private lending problem. It’s seen in every industry in every trade unfortunately.Quote from @Carlos Ptriawan:
Quote from @Alex Breshears:
I can’t tell you how happy I am that you stood your ground! I’ve seen this before and so many people just bend to their will. I have done transactional funding - but I still underwrite the deal as if they would keep it on the off chance they can’t get the end buyer to exercise and actually close. You did the right thing!Quote from @Becca F.:
Someone on BP messaged me about doing transactional lending and a double close. I spoke with him on the phone and he asked me if I could help fund his deal for $91,000 and it would be wired to a title company. He would pay me 7% and I would get the money back in 24 hours, 48 hours at the most. He does his sales pitch about loaning him $100,000 and doing multiple deals in a month and I could supposedly make $30,000 a month by doing 10 deals a month.
I told him I wanted to research this. I've never met this guy - he's out of state in Florida, says he's a licensed realtor. He sent me the purchase agreements for these properties. The title company emails me paperwork thinking I'm going to loan him over $200,000 for 2 properties... absolutely not. Then lots of high pressure, promises me 10% then 12% if I can fund his deal or find someone else. I have no idea if this title company is legit. They have a website. I could throw up a site and say I'm XYZ business.
I guess some people make money doing transactional lending but this whole scenario sounded shady. If it was someone in the Bay Area I could meet in person, may be worth considering but someone over 2000 miles away, hard pass. Making $30,000 a month.... come on.... I have a bridge to sell you in Alaska.
No matter what - you have them sign your documents that you had your attorney create for you. Do not use someone else’s docs - ever. You don’t know if they are legal in that state or even protect you as the lender. It’s critical you know your docs and are familiar with your terms in those documents. Don’t fall to the pressure tactics. Stick to your guns and your gut!this industry is very scary
The promissory note didn't even look like it was written up by an attorney. He probably wrote it up on a MS Word or Google Doc, no notary seal or anything to certify his identity and uploaded it to DocuSign "Name of person promise to pay Becca F. the sum of $$$$..... The note shall be referred after default to an attorney at law for collection if....." I just thought the urgency for me to sign it the increasing the percent he was going to give me was a huge red flag - I'm not signing anything without an attorney reviewing it.
It was DocuSigned by him and the title company rep, like that's supposed to make it all legal and official. I think the "title company rep" is part of his whole scheme. I hope someone else didn't fall for this.
Lender can sign the prom note but its not necessary also Prom notes can be notarized but most are not. making unsecured loans to someone you met on the internet or on BP is foolish to the extreme to even entertain it. Also unsecrued Prom notes are very short and to the point usually no more than one or two small paragraphs so I can see how you would get the impression that it did not look right and I am confused about signed by title company rep that would NEVER happen so thats weird right there. Can you forward a copy of this to me on DM I would like to see what it looks like and I can give you feedback if you wish of course.Jay I sent you a DM with the attachments. Thanks for your feedback.
I reviewed and sent you my thoughts.. for the benefit of the audience. Good job on your part slowing down and not getting blinded by the huge return.
1. What you have is a unsecured Prom note with scrivener errors running through it. And signed via docusign and the purported escrow officer signed it.. that is something I have never seen and is highly suspect to me.
2. You were sent a purchase contract by the wholesaler that is not signed by the seller so there is no contract . Title company would not go forward without fully ratified contracts.
3. Settlement statement that does not look right to me. missing information and it could have been photo shopped.. I have seen over the years photo shopped settlement statements were unsuspecting buyers wired money into bad people and lost it all..
Other than the normal red flags getting hit up on BP or SM . One would want to double and triple check the title company and the escrow officer NOT BY E Mail by phone and If needed you ask who their underwriter is and then call a CA title company you may know that has the same underwriter and ask them to verify this company is real. I know it sounds over the top.. but there is a ton of fraud out there.
best of luck and thank you for allowing us to go through this exercise and hopefully folks reading this will pick up some things that will help them vette their future deals. - Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Chris Seveney:
Ok so this is something that honestly just completely blows my mind and I’m curious if I am the only one that is completely nuts or do others agree with me?
I continue to see more and more investors, either doing private, lending or investing in debt, not take into consideration the risk.
What do I mean by that? I am seeing people investing in opportunities where they are in a second or even unsecured position and are targeted to receive a net 1-2% above a 1st position lien.
For example,:
Option #1:
You receive a $50k first position lien $100k property - you are targeting to get a 9% return.
Option #2:
You are in 2nd position on the above deal and are $50k so 100% ltv and you are targeting to get 10%
Option #3:
you give someone $50k and it unsecured for them to go out and buy an asset and you are targeting to get 13%.
I have literally seen several people over the last few days say they’re going to go option three because it provides the highest return. So curious if people think I’m nuts? We view the risk of a 2nd and would add 3-5% higher (min) for the risk and unsecured we would not even touch, but I would put it at 2x a second.
Curious to hear how others evaluate risk?
Also, if you know somebody who selected option number three and lost 100% of their money, would you feel bad for them?
Hi Chris,
more and more I felt the reason why some investors are making money or losing money is because of the "asymetrical return and risk information".
The more experienced investor like yourself has adequate understanding of risk. - 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Jay Hinrichs:
Quote from @Becca F.:
Quote from @Jay Hinrichs:
Quote from @Becca F.:
Quote from @Alex Breshears:
I think any industry is going to face issues with people trying to game the system or just outright commit fraud or take advantage of others. I don’t think this is exclusively a private lending problem. It’s seen in every industry in every trade unfortunately.Quote from @Carlos Ptriawan:
Quote from @Alex Breshears:
I can’t tell you how happy I am that you stood your ground! I’ve seen this before and so many people just bend to their will. I have done transactional funding - but I still underwrite the deal as if they would keep it on the off chance they can’t get the end buyer to exercise and actually close. You did the right thing!Quote from @Becca F.:
Someone on BP messaged me about doing transactional lending and a double close. I spoke with him on the phone and he asked me if I could help fund his deal for $91,000 and it would be wired to a title company. He would pay me 7% and I would get the money back in 24 hours, 48 hours at the most. He does his sales pitch about loaning him $100,000 and doing multiple deals in a month and I could supposedly make $30,000 a month by doing 10 deals a month.
I told him I wanted to research this. I've never met this guy - he's out of state in Florida, says he's a licensed realtor. He sent me the purchase agreements for these properties. The title company emails me paperwork thinking I'm going to loan him over $200,000 for 2 properties... absolutely not. Then lots of high pressure, promises me 10% then 12% if I can fund his deal or find someone else. I have no idea if this title company is legit. They have a website. I could throw up a site and say I'm XYZ business.
I guess some people make money doing transactional lending but this whole scenario sounded shady. If it was someone in the Bay Area I could meet in person, may be worth considering but someone over 2000 miles away, hard pass. Making $30,000 a month.... come on.... I have a bridge to sell you in Alaska.
No matter what - you have them sign your documents that you had your attorney create for you. Do not use someone else’s docs - ever. You don’t know if they are legal in that state or even protect you as the lender. It’s critical you know your docs and are familiar with your terms in those documents. Don’t fall to the pressure tactics. Stick to your guns and your gut!this industry is very scary
The promissory note didn't even look like it was written up by an attorney. He probably wrote it up on a MS Word or Google Doc, no notary seal or anything to certify his identity and uploaded it to DocuSign "Name of person promise to pay Becca F. the sum of $$$$..... The note shall be referred after default to an attorney at law for collection if....." I just thought the urgency for me to sign it the increasing the percent he was going to give me was a huge red flag - I'm not signing anything without an attorney reviewing it.
It was DocuSigned by him and the title company rep, like that's supposed to make it all legal and official. I think the "title company rep" is part of his whole scheme. I hope someone else didn't fall for this.
Lender can sign the prom note but its not necessary also Prom notes can be notarized but most are not. making unsecured loans to someone you met on the internet or on BP is foolish to the extreme to even entertain it. Also unsecrued Prom notes are very short and to the point usually no more than one or two small paragraphs so I can see how you would get the impression that it did not look right and I am confused about signed by title company rep that would NEVER happen so thats weird right there. Can you forward a copy of this to me on DM I would like to see what it looks like and I can give you feedback if you wish of course.Jay I sent you a DM with the attachments. Thanks for your feedback.
I reviewed and sent you my thoughts.. for the benefit of the audience. Good job on your part slowing down and not getting blinded by the huge return.
1. What you have is a unsecured Prom note with scrivener errors running through it. And signed via docusign and the purported escrow officer signed it.. that is something I have never seen and is highly suspect to me.
2. You were sent a purchase contract by the wholesaler that is not signed by the seller so there is no contract . Title company would not go forward without fully ratified contracts.
3. Settlement statement that does not look right to me. missing information and it could have been photo shopped.. I have seen over the years photo shopped settlement statements were unsuspecting buyers wired money into bad people and lost it all..
Other than the normal red flags getting hit up on BP or SM . One would want to double and triple check the title company and the escrow officer NOT BY E Mail by phone and If needed you ask who their underwriter is and then call a CA title company you may know that has the same underwriter and ask them to verify this company is real. I know it sounds over the top.. but there is a ton of fraud out there.
best of luck and thank you for allowing us to go through this exercise and hopefully folks reading this will pick up some things that will help them vette their future deals.I had a few moments after my bizz day .. so I searched for the title company in the settlement statement and they do not exist on line.. there are a few with the same name but they are not in FLA. Also I missed it this morning but the settlement statement was dated middle of Nov. 2023.. Man o Man this could be a deep fake and potential fraud situation with someone who was trusting ending up losing the 91k they were asking you to wire in.. .. I could be wrong about the title company but title companys are pretty evident when you try to find them on line.
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Jay Hinrichs:
Quote from @Jay Hinrichs:
Quote from @Becca F.:
Quote from @Jay Hinrichs:
Quote from @Becca F.:
Quote from @Alex Breshears:
I think any industry is going to face issues with people trying to game the system or just outright commit fraud or take advantage of others. I don’t think this is exclusively a private lending problem. It’s seen in every industry in every trade unfortunately.Quote from @Carlos Ptriawan:
Quote from @Alex Breshears:
I can’t tell you how happy I am that you stood your ground! I’ve seen this before and so many people just bend to their will. I have done transactional funding - but I still underwrite the deal as if they would keep it on the off chance they can’t get the end buyer to exercise and actually close. You did the right thing!Quote from @Becca F.:
Someone on BP messaged me about doing transactional lending and a double close. I spoke with him on the phone and he asked me if I could help fund his deal for $91,000 and it would be wired to a title company. He would pay me 7% and I would get the money back in 24 hours, 48 hours at the most. He does his sales pitch about loaning him $100,000 and doing multiple deals in a month and I could supposedly make $30,000 a month by doing 10 deals a month.
I told him I wanted to research this. I've never met this guy - he's out of state in Florida, says he's a licensed realtor. He sent me the purchase agreements for these properties. The title company emails me paperwork thinking I'm going to loan him over $200,000 for 2 properties... absolutely not. Then lots of high pressure, promises me 10% then 12% if I can fund his deal or find someone else. I have no idea if this title company is legit. They have a website. I could throw up a site and say I'm XYZ business.
I guess some people make money doing transactional lending but this whole scenario sounded shady. If it was someone in the Bay Area I could meet in person, may be worth considering but someone over 2000 miles away, hard pass. Making $30,000 a month.... come on.... I have a bridge to sell you in Alaska.
No matter what - you have them sign your documents that you had your attorney create for you. Do not use someone else’s docs - ever. You don’t know if they are legal in that state or even protect you as the lender. It’s critical you know your docs and are familiar with your terms in those documents. Don’t fall to the pressure tactics. Stick to your guns and your gut!this industry is very scary
The promissory note didn't even look like it was written up by an attorney. He probably wrote it up on a MS Word or Google Doc, no notary seal or anything to certify his identity and uploaded it to DocuSign "Name of person promise to pay Becca F. the sum of $$$$..... The note shall be referred after default to an attorney at law for collection if....." I just thought the urgency for me to sign it the increasing the percent he was going to give me was a huge red flag - I'm not signing anything without an attorney reviewing it.
It was DocuSigned by him and the title company rep, like that's supposed to make it all legal and official. I think the "title company rep" is part of his whole scheme. I hope someone else didn't fall for this.
Lender can sign the prom note but its not necessary also Prom notes can be notarized but most are not. making unsecured loans to someone you met on the internet or on BP is foolish to the extreme to even entertain it. Also unsecrued Prom notes are very short and to the point usually no more than one or two small paragraphs so I can see how you would get the impression that it did not look right and I am confused about signed by title company rep that would NEVER happen so thats weird right there. Can you forward a copy of this to me on DM I would like to see what it looks like and I can give you feedback if you wish of course.Jay I sent you a DM with the attachments. Thanks for your feedback.
I reviewed and sent you my thoughts.. for the benefit of the audience. Good job on your part slowing down and not getting blinded by the huge return.
1. What you have is a unsecured Prom note with scrivener errors running through it. And signed via docusign and the purported escrow officer signed it.. that is something I have never seen and is highly suspect to me.
2. You were sent a purchase contract by the wholesaler that is not signed by the seller so there is no contract . Title company would not go forward without fully ratified contracts.
3. Settlement statement that does not look right to me. missing information and it could have been photo shopped.. I have seen over the years photo shopped settlement statements were unsuspecting buyers wired money into bad people and lost it all..
Other than the normal red flags getting hit up on BP or SM . One would want to double and triple check the title company and the escrow officer NOT BY E Mail by phone and If needed you ask who their underwriter is and then call a CA title company you may know that has the same underwriter and ask them to verify this company is real. I know it sounds over the top.. but there is a ton of fraud out there.
best of luck and thank you for allowing us to go through this exercise and hopefully folks reading this will pick up some things that will help them vette their future deals.I had a few moments after my bizz day .. so I searched for the title company in the settlement statement and they do not exist on line.. there are a few with the same name but they are not in FLA. Also I missed it this morning but the settlement statement was dated middle of Nov. 2023.. Man o Man this could be a deep fake and potential fraud situation with someone who was trusting ending up losing the 91k they were asking you to wire in.. .. I could be wrong about the title company but title companys are pretty evident when you try to find them on line.
the fact that she's asking Becca to wire is already indication it's a fraud. It's just too obvious.
- Member since 2024 · 162 posts · 232 votes2y
This is a very educational thread about the risks and fraudulent people out there, thankyou, Why not for a younger/less experienced investor interested in the lending space, just buy a handful of the lending REITs, aka BDCs- the business development companies, like Blackstone lending, BlackRock, Goldman Sachs lending, Ares Capital, Hercules Capital etc? There are dozens of these publicly traded and SEC governed. They lend money in 1st position to growing companies and even to REITS, they can be bought/sold for free on your phone, they pay from 10-14% yearly dividends, and their stock prices have been slowly trending up last 4 years? been getting 16-20% total yearly returns on these including the dividends? If the FED ever cuts rates, which they may not be able to if GDP growth stays so high, then you can sell the BDCs before they fall too much? (I use a trailing 10% stop loss)
- Morris County, NJ · Member since 2020 · 5k+ posts · 2k+ votes2y
@Paul Azad LOL. I've been saying that... But, this is a real estate investing forum :) Besides, people gotta start somewhere I guess.
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