What type of hard money lending scams should I look out for? Are there any legit lenders out there?

Question

Ok so I've been on here for a little bit looking to network with some potential HML's. I'm in central ma, and the rental market here is very very very profitable. But who has 25% to put down on every apartment complex ya know. So I'm looking for legit lenders who will help me close in reasonable time. I don't mind paying high interest rates as long as I can make some type of monthly profit.

What type of hard money lending scams should I avoid?

Nunzio Acocella · Answer

Well private lending because I am looking for reasonable rates not hard money rates even individuals is fine but were to find them and don't they have  a company name even if they are lending their own money?

Jason Hirko · Answer

@Nunzio Acocella No, that is not normal and is most likely not legitimate. When you say private funding companies, what are you referring to? Individuals lending their own money or hard money lenders?

Nunzio Acocella · Answer

I am looking to refinance my current mortgage with private funding I have been looking and getting some curious responses which are reasonable.  But I notice some similarities with some companies like when they fund you they I start paying after six months.  Now it's nice that they are willing to start the pay back is this a normal in regards to private lending.  Any feed back appreciated.

Doran Summers · Answer

@Sammie J. Bell. Please contact me and I can direct you to a few great hard money lenders.

Sammie J. Bell · Answer

Does anyone have experience with a company called Do Hard Money? I found them on BP, and I'm thinking about using them.

Joel Owens · Answer

Professional con artists are very good at what they do.

Many left the residential arena now that it is highly regulated to play in the commercial arena.

When that becomes hard to manipulate they will move on to something else.

I wish we had a bad lenders website where these companies would be exposed.

"Some people actually make a living off of collecting these types of fees without doing any actual business."

I don't see it as making a living but stealing and committing fraud disguised as a legal operation.I believe as I am sure you do that they should be prosecuted to the fullest extent of the law and imprisoned for committing such acts.

It's simple if you do not perform a service as promised you should not get paid.

Colonel Boothe · Answer

How much did you lose buck? And how did they entice you into sending them money?

Buck Tadlock · Answer

Wish I had found this thread a few weeks ago!
After getting that bad gut feeling on a few lenders and never proceeding with them, I ended up with what I thought was a legitimate lender....boy was I wrong!
I'm hoping to get my EM back - that was my biggest out of pocket, I don't expect to see the "engagement fee" (though he said he will send it - I'm sure it will get lost in the mail).  But there is pretty much no way to get my appraisal and survey money back.
If the stars line up, I may still be able to acquire the property - but after the 3 ring circus this lender caused, I'm sure the seller/agents are all going to avoid me like the plague.
(I was actually at closing waiting for the wire to show up, which it was supposedly wired the day before.  Lender had all wiring docs/info weeks in advance).

Chris Gleason · Answer

Agreed, upfront fees should be your biggest worry. The most common scam in the marketplace is the "Fee Stealing" scheme. People pose as lenders and then get you to send them money upfront either as a "due diligence cost" or "commitment fee" and then fail to fund your loan. Of course it's no surprise when they also don't send your money back. Some people actually make a living off of collecting these types of fees without doing any actual business.

Eric M. · Answer

Joel is right.  The only scam you need to worry about is fees upfront.
And yes, if you don't have 20% to put down, you will find it very difficult to find a legit lender.  It takes cash to own and operate a large rental property, more than just the down payment.