Wholesaler/rehabber · Arcadia, FL · Member since 2013 · 341 posts · 22 votes
I am on the search for a new lender to fund my rehabbing efforts in my area. I found a post on LinkedIn simply stating this person was working with new investors who are allowing him to lend there money out to fund deals. so i commented on it and got a reply. found some deals i needed funded and even sent over a analysis of a few deals to show him the profit potential in the deals I found. so emailed back and forth about his process and how much he could lend me. We settled on a number for a smaller deal I had in the works. then he started talking about me sending him the fee for loan insurance and he could have the money transferred today to one of my accounts. the amount was a little over $600 bucks which was fine. but then i started to think if this could be a scam that i would lose my money in. i looked it up and come to find out that this is a common way to get scammed out of your money. i don't know any one who has used this guy before but he has gotten a lot of comments on his post on linkedin. should i seek out a diffrent private money lender? or is there a way i can vet this gentleman so i know he is genuine and move forward?
@Shequann Burrwell You do not understand what a private lender is. A PL is someone you personally know who may be willing to lend or invest with you on a project based on a personal relationship and the merit of the deal.
@Shequann Burrwell You do not understand what a private lender is. A PL is someone you personally know who may be willing to lend or invest with you on a project based on a personal relationship and the merit of the deal.
@Shequann Burrwell I won't comment on whether this was a scam or not but I will provide some rules of thumb.
1. Most private lenders won't require you to send any money to them. There are some institutional lenders that may require a fee for an appraisal or an application fee, but the legit ones won't press on that until they know they can do the deal. Bottom line: No money up front.
2. Loan insurance: Normally the borrower pays for "Title Insurance" which some may call "Loan Insurance" but the money for this comes from the proceeds @ closing. Rule of thumb: For the legitimate lenders the majority of the lender fees are handled @ closing. There may be some application fees, or you may have to pay for an insurance binder, but that will be direct w/ the insurance company. He should be providing you w/ an estimate of his "Junk fee" costs. Don't use the term Junk w/ the lender.
@Shequann Burrwell I think its a scam. I got scammed from someone like this. The guy requested $300 trust insurance fee for 400K loan. I always suspected it to be a scam but was willing to lose the $300 rather not trying at all. He took the money (usually in weird payment method) and gave me the round around. I gave up. After i goggled his phone numbers and found out that he is a well known fraud.
Don't feel bad, I just got F*** by this private lender in Chicago, Ill goes by Javier Miguel. $2600 down the drain. I should have know better, I should have never sent any money for BS insurance on a loan and the 1.5% transaction fee and the 633.00 closing fee.
There is no such thing as "loan insurance" for any unregulated lender, private lenders and most hard money lenders are not regulated under government agencies, at least not as to loss coverages. Anyone saying they have loan insurance needs to be reported.
Such rip offs really need to be reported and often money is recovered. If someone advertises to make loans they are not private lenders, they are in the business of lending. Many aren't even registered!
Places you can report to: Attorney General, your state Division of Finance, State Banking Authority or Supervision, CFPB, the F.B.I is usually interested in these types, Fair Trade Commission, Postal Inspector if the mail was used, don't forget you local DA. HUD has a direct fraud line too. Don't forget small claims court with "individuals" lending.
Keep records of all communications, copies of advertising, dates and times of discussions simply keep good notes, don't record phone calls without proper disclosure, that goes to wire tapping.
There are heavy fines and penalties for these fraudsters and cheats, so report them and get them out of the business, the least you can do is keep someone else from being a victim. :)
@Shequann Burrwell You do not understand what a private lender is. A PL is someone you personally know who may be willing to lend or invest with you on a project based on a personal relationship and the merit of the deal.
Don is spot on. For a PL, character is important - hence, the need to establish personal relationship. PLs usually don't advertise on LinkedIn.
I gave a 15-minute presentation to CAREIA (Chicago Area REIA) about private lending and when I was asked - "Why will I choose you as my private lender?" I replied:
"You don't have to choose me. You need to look for a private lender who knows and trust you. I don't lend money to people I don't know and trust."
@Shequann Burrwell I won't comment on whether this was a scam or not but I will provide some rules of thumb.
1. Most private lenders won't require you to send any money to them. There are some institutional lenders that may require a fee for an appraisal or an application fee, but the legit ones won't press on that until they know they can do the deal. Bottom line: No money up front.
2. Loan insurance: Normally the borrower pays for "Title Insurance" which some may call "Loan Insurance" but the money for this comes from the proceeds @ closing. Rule of thumb: For the legitimate lenders the majority of the lender fees are handled @ closing. There may be some application fees, or you may have to pay for an insurance binder, but that will be direct w/ the insurance company. He should be providing you w/ an estimate of his "Junk fee" costs. Don't use the term Junk w/ the lender.
3. How you vet- I think you've vetted him.
As always Crystal's answer is right on the money.
I am a PL myself - I don't require money upfront. Beware of those who require fees upfront. The only fee you should pay other than the appraisal is an origination fee or discount points but those are paid at the closing.
Weed out 99% of them by immediately requesting a conference call on Skype where you see them on video.
Scammers tend to hide behind a keyboard with smoke and mirrors.
Legitimate mortgage brokers or lenders have no problem getting paid their fee when it closes.
If a lender tells you everything is fine etc. when submitting your deal then run. A credible lender usually is very thorough and asks lot's of preliminary questions about a property before even considering it.
Another red flag is most credible lenders have similar loan programs with slight variances. So if you run across a "miracle lender" with a program that sounds to good to be true it probably is. When you get excuses from a lender instead of answers that is yet another red flag.
I agree with @Joel Owens requesting for a Skype or FaceTime can weed out the scammers.
Most (Nearly all) legitimate HML's and PL's will not charge you any "Upfront fees' prior to closing. This is the mark of a scam. Check their website if applicable, ask for references, and most importantly follow your gut!
It is unfortunate, but scammers have been around for years and they are always finding new ways to fraud. Good luck to you, I hope you find a good honest lender that you can trust and is willing to work WITH you.
I will fund you $5 million dollars if you will send me $2,000.00 fee first because of...................................................................................................................................................................................................................................................................................................................................?
No documents, no verifiable location, Outside of the USA? If it smells like a scam and looks like a scam and acts like a scam then its a scam, period.
No loan qualifying? They do not want or demand your financials? They do not ask for a credit app? Just out of no where they will fund you for no reason and no questions asked? Scam, Scam, Scam. !!!!!!!!!!!!
Reading this confirms my suspicions about a conversation going on right now with a man. Everything is by email; no company name; no address or website listed; 3 people in the deal have given me the same phone number.
Found a Craigslist ad (now before you think "oh yeah well Craigslist...duh" know that 1 CL ad turned into finding a great private lender who loaned me lots of money this year to do deals but he has more investors now and has tapped his funds)........but back to my story......the guy's name was Kenneth Rock.
Told him about the deal I was seeking funds for. He referred me to a man named Jesse Mise with an email. A few emails back and forth (weird that he really didn't understand some basic investment deal questions I was asking - red flag #1). Got a 150k 3% loan.
Given another name - Kim Holden - same phone number as Kenneth. Asking me to send $1,000 for app fee. I've even said I need more info before I will send money.
Googled all 3 and found some info that seems legit - but I just have a feeling that 1 person is running this scam, not 3.
Bottom line - I'm running from this one..............
BEAWARE, scam artis come from all over the world, In meny shape, sizes and colors,, In most cases they have done there home work, so theyll come a cross as convincing, that's why its very important that you do your home work,, Over the last few days Ive been in contact with this fellow that calls him self John Hagen from Baerum, Norway, whom has a post on loopnet, claiming to lend on any project over a millon USD. Needless to say after a few emails back and forth, the scaim begain to unfold,, Red flags begain poping up, once he started asking for money for his consultant,,
BELOW IS A COPY OF THE EMAIL HE SENT.
I have spoken with the consultant, closing and administration cost will apply as here under stated. However, according to my consultant, this closing and administration cost would be needed only after he has drafted the investment agreement and we, as the parties, have accepted, reviewed and signed it.
The consultant said that after the investment agreement is signed, some costs would arise in some offices in order to legalize and file the signed agreement and this would require that 80% of the closing and administration fee be paid to him.
The closing fee and administration cost is £8,500 GBP (Eight Thousand Five Hundred Great Britain Pounds) and it is required that you, as the borrower, will pay 80% to the consultant after reviewing and signing the financing agreement for the below reasons. The balance of 20% would be paid after you have received fund in your account...
Expecting to hear from you.
Regards, John Hagen Nordveien 43B, 1359 EIKSMARKA, BÆRUM, NORWAY.
Crichiebank Business Centre Mill Road Aberdeen AB51 5NQ UK
"...then he started talking about me sending him the fee for loan insurance and he could have the money transferred today to one of my accounts. the amount was a little over $600 bucks which was fine..."
"...fee for loan insurance and he could have the money transferred today..."
Complete ********. No HML would EVER lend you money in less than 8 hours.
It takes time to process the information, research the location, check out the comps, get the credit check results back, eat lunch, waste 15-30 minutes browsing youtube thinking about the risk, paying someone from CL to go out to the location, take the required photos, send them back to you, moving the money, and sending the wire.
Also, no such thing as "loan insurance". The whole concept of a loan is its a risk. You cant just "FDIC" a loan.
If anything, the guy is making you pay a finance fee for him to borrow the money for him to loan it to you at a higher rate.
My husband and I almost got scammed KK Lenders asking for loan insurance that put a red flag up for me and I said to them why do we have to pay upfront fee. They come back with we need this money to proceed with your funding. So question is anyone out there willing to do a loan? Please advise on what to do. Thank goodness for this website i found or i would have been "screwed out of my money"
@Gale Black what folks fall into here is frankly they respond to these scammer adds that tout terms rates etc etc that are NOT REAL ... they were never REAL and are simply posted to get you to send them small money and then move to next victim.
simply google your local HML who has an office that you can walk into .. you can verify with title co or closing attornies that they acutally lend money. only up front would be 3p appraisal and maybe a credit report.. that's it NOTHING ELSE.
for those in real estate that want money who can't get it from their local bank at bank rates.
rates and terms are
2 to 5 points
10 to 15% interest
anything less than that for short term fix and flip financing is a SCAM
if you looking for buy and hold you need 20 to 30% Cash Down if yhou do not have that your wasting your time NO lender that is legit in todays environment is going to give you 100% loan it does not exist.
I have received email correspondence from the same person after seeking private funding as a bridging loan to transfer my Holisitc Health Buisness to a large acreage in the Hunter Vineyards.
John Hagen Nordveien 43B, 1359 EIKSMARKA, BÆRUM, NORWAY.
Crichiebank Business Centre Mill Road Aberdeen AB51 5NQ UK
******Wanted to add a new one for all investors out there. Michael Hamza Karl & Rachael Ugwandu. STOP wiring money to these guys with FCFS loans. First cloud. They are scammers and I'm in the process of reporting them to the FBI. Michael is part of LinkedIN private/hard money and all real estate groups. **** As of right now they are using fictitious Bank of America Letter heads and it's been verified that they are receiving money from all over the USA. STOP!!! I"m blessed to have the resources to push this investigation further but there are many unsuspecting new investors at the verge of losing everything!
"Welcome to my network. We offer Business Investments and Private Hard Money Lending Services. We provide these loans to be used for the acquisition, start-ups, refinance, rehabilitation and equity cash out of investment, equity investments, commercial properties, property development and real estate.
For personal loans, small business loans and start-ups, We offer credit of up to $500,000.00 at the interest rate of 5%. For C-Level companies, Investors, large equipment and real estate projects, We offer credit of up to $500,000,000.00 depending on inventory and/or other collateral. The interest rate is 5% to 10 %, the maximum loan duration is 1-15 years for $500,000.00 credit offer and 1-25 years for $500,000,000.00.
As a private money lender, all decisions are made in-house allowing us to work quickly and decisively on your behalf offering fewer hassles and a faster turnaround. Please email us and provide us with a comprehensive Business Projects/Proposal and we will review for possible approval and funding.
@Alex Sanz Thanks for the warning Alex! Yeah when I went to click on that www.fcfsloans.com address, here at work, my company's internet scanning immediately threw up a warning stating not to proceed to that website!
Hi @Tom S., Thanks for the response. I did not get any warning at all from the site. I'm guessing others might not either. :/ Hopefully they will google and see this in the search as I didn't find anything on the company on google search other then the company's dummy site.
I just came across a lender like this which is why I searched here on BP and found this post! He posted on my local REIA "haves and wants" page a few days ago about lending. So, I emailed him and he said he lends up to 3M at 3% interest, 100% LTV, no credit check, no DTI, but PMI is required. The 3%, 100% LTV and PMI seemed very strange to me so I asked him about it. (PMI being an FHA mortgage term!) He said the PMI was an $850 up-front fee and that after he receives that and the application ( application had only general information on it, nothing about the particular deal) that it takes 3 days to get the funds. I was thinking "there is no way I would lend to someone with this little information! And 3% interest at 100% LTV?!! Sounds too good to be true!! " I was going to ask for references next but it looks like my suspicions are confirmed here. Thanks, everyone!
@Jacqueline Coombs its sad really.. these are folks preying on folks that just don't know any better if you are in the business a little bit you will realize there are no such thing as loans at these terms at least as it relates to new real estate investors..
private lenders are those you eye ball and are your local business men.. professionals with some money to lend... NOt ANYONE you meet on the internet generally... and for sure no one that advertises 5% money... private money is 9 to 15%
Sadly me being the newb and a little on the desperate side.... just got scammed a little. I was looking to purchase a rental property to produce some cash flow and was contacted on Linkedin by someone, Joe Hicks (https://www.linkedin.com/in/joe-hicks-b8a5a8133). we emailed back and forth a few times and I decided to give private lending a go. We agreed on a loan of $50k 25yrs @ 5%. Everything seemed good, then came the application fee of $940. I stupidly figured why not, $940 for $50k is worth it. Made the transaction and was told funds would be deposited... then this morning I woke up to an email stating that he needed a loan collateral fee of $1850 and that was the only thing pending for the deposit.
emailed back and forth and he came down to $650. I requested a phone call and finally got him on the phone, voice doesn't match his Linkedin photo.
Start doing more digging and I'm seeing red flags. Like a person named Brian Darisay (https://www.linkedin.com/in/briandarisay) who happens to have almost the identical bio.
At least the damage is less than $1k but damn it stings, especially when you don't have a lot of money and now I likely will need to back out of the deal.
This Private money lending scam must be very profitable because it continues to proliferate through all of social media. I had a guy named Abraham Cruz friend request me on FB and I reluctantly accepted it. He then messages me asking if I'm into real estate(as if he couldn't tell by my personal & business page). He then goes on to tell me he's a PML. After a few messages back & forth I give him my email address and he sends me his terms and conditions. Low and behold at the bottom of the terms & conditions it states and must agree to pay for loan insurance. ofcourse, all the other terms were sweet, like 4% interest, up to 6 months grace period before repayment begins, up to 100% financing, etc... you get the picture. I never borrowed from a PML so I called up another seasoned investor I know and he never heard of "loan insurance" either. I was even thinking maybe it's the private version of PMI. Glad I decided to look it up on google and found the BP blog post on it. "If it sounds too good to be true then it probably is" are words to live by. Thanks everybody for your insight on this.
