Legitimate Lender? How Can I Spot a Fraud?

[Ben Colabella]

I put out a post on Connected Investor about wanting a loan on a condo hotel that I self manage. I’ve been receiving offers, but they seem too good to be true.

I was wondering if anyone has any advice on how to spot a fraudster. What is a sure way to tell if a lender is legitimate?

[Jeff S.]

It could work, but I think you can do better than relying on your intuition, @Ben Colabella. First, stay of the web when looking for money. Connected Investors, LinkedIn, Craigslist, and others can be cesspools of scammers. You don’t borrow money like this anonymously. Non-conventional money is best borrowed thru relationships.

There are a ton of legitimate lenders out there and he safest way to develop a relationship is face-to-face. Local real estate clubs are the easiest way to find the greatest concentration of serious lenders.

This is a list of some real estate clubs near Morristown, NJ from Meetup.com. With the amount of money floating around now, it would be hard to toss a rock into any of these and not hit a legitimate lender with whom you can have a real conversation. If you don’t know what to ask, you can find a list of informed questions in this post: Questions for Hard Money Lenders.

In your case, I would also be prepared to explain your business model since condo hotels are not particularly common. (And if this is a Las Vegas property, where condo hotels seem most common, you will need a broker licensed in NV. Hopefully, not the case.)

Good luck, Ben.