Now Here's a Good Question For Ya! PL Dark Side?

[Brenda Whittaker]

I hear there are a lot of private lending scams out there.  Are there none beyond your own personal acquaintances that are reputable?  Do they all charge application fees?  What is the best way to check a prospective lender's credentials?   Or if there really is a lender behind the website?  Are there organizations that report on them?

[Ann Bellamy]

In my opinion, you should use local lenders for several reasons:

• 1.  You can ask around at the local real estate investor groups about people's experience, good and bad, and their general reputation. 
• 2.  They know something about the local market so don't need to charge junk fees to make sure they get a good deal, and rates are lower because if the worst happens, they have a local network of investors who will take it off their hands.  
• 3.  Most local lenders form their own estimate of value so don't need to order an outside appraisal, saving time and $
• 4.  If several local lenders turn down your deal, that should tell you something.  A national lender won't know the local market.

So to answer your question, go to your local REIAs or other real estate meetups and start asking everyone you meet for referrals to local lenders.  Ask them what they liked and what they didn't like.  Then make your decisions.  When you meet someone in person it's a lot easier to have your radar catch a scam.