Private Lenders Keep Reaching Out To Me, Are They Legit?

Question

How do you know who is legit and who isn't?

And if it is a scam, what are they gaining?

I've probably had at least ten private lending companies reach out to me through LinkedIn and I never know if it's real or not...

Up until recently I have only done conventional loans, but I'm on my fourth and it is getting increasingly more difficult to obtain a conventional loan.

Any advice or lenders you recommend?

Jeff S. · Answer

Stay of the web when looking for money, @Brittany Vigneault.  LinkedIn, Facebook, Connected Investors, Craigslist, and the like are cesspools of scammers. These scoundrels will disappear after asking you to pay up-front fees.  They will also request your personal financial information and steal your identity.  You don’t borrow money like this anonymously.  Non-conventional money is best borrowed through 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 Charlotte, NC 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: Private Money Lender – How to Qualify the Lender .

Account Closed · Answer

@Brittany Vigneault

Put this in perspective, if you had tons of capital to lend out at a competitive rate, would you need to cold call? Not likely.

Christopher Winkler · Answer

As a commercial loan broker, the lenders we use are licensed in the states they do business in with the NMLS, and we are licensed in the states that require it, for now its AZ, CA, NV.

They make business purpose, non owner occupied loans to landlords like you based on the DSCR, your FICO, and the appraisal with no limits on units. There are legitimate private lenders out there, you just have to be careful and vet them before you give them any personal information. BP has a link on this site for avoiding a scam; https://www.biggerpockets.com/...

If they don't have a real business, and are some guy with a gmail account, be wary, check addresses, get their banker and attorney contacts if your BS Detector goes off, and my favorite way is to right click their picture in Chrome, and search Google, and if he comes up with different names, you found one.

One guy on LinkedIn actually pasted a new head on a picture and created a LI account, and Google picked it up based on the tie, name tag, watch, suit, etc. Check out this pic, the guy on the left is the fraudster, Steve Kevin!

Jeff S. · Answer

“I'll disagree with Jeff S. that you NEED to meet lenders face to face.  I can't imagine I'd close many loans with this requirement.

The fact that you might not close many loans is not @Brittany Vigneault’s problem, Alex. Hers is to protect herself.  She has no obligation to work with anyone anonymously over the web, especially when there are safer means.

Sorry, but “… verifying references, reviews, etc or using your best judgement” are not safer means.  And no, it’s just not true that “Most of these scammers can be spotted from a mile away.”  Some of the scammers are extremely slick.

Obviously, finding lenders one-by-one at a real estate club is not as efficient at locating them in bulk online.  But who cares about efficiency?  Most borrowers don’t need to find a large volume of lenders.  They need few they can work with closely.  There is no need for volume here, but a lot of value spending time building a face-to-face relationship.

A local lender will know your area, the cities, and the prevailing lending rates.  Maybe even the building departments.  They will be able to do much more than a generic evaluation when they evaluate your loan and
your specific property.  Plus, no one can tell me you will get the best deal or gain the trust of someone whom you've never met. This is especially true if you need a loan extension or other accommodation sometime in the future.

Commissioned mortgage brokers make money with volume and the web is perfect for that.  There’s also nothing wrong with marketing or even cold-calling.  The problem is that the industry is being plagued by online scammers and it’s all but impossible to tell who’s legit and who’s not.  In addition to the other advantages I mention above, meeting lenders who regularly attend local real estate clubs, face-to-face, is the safest way to avoid an online scam.

That there are those who must rely on the web for their commissions is not Brittany’s problem.  The industry needs to clean itself up.  And yes, I’m in the industry too.

Alex Bekeza · Answer

@Brittany Vigneault To use a cliche, "if it sounds too good to be true, it probably is".  Most of these scammers can be spotted from a mile away but at the same time I understand that there are people who will go to great lengths to trick people.  I'll never understand since it seems like more work and stress than just doing an honest job LOL. I've found that facebook is the worst at policing it and I do zero marketing there.

I'll say Bigger Pockets does a fair job of policing scammers although I know of a few whose profiles lasted way too long on here.

I'll disagree with Jeff S. that you NEED to meet lenders face to face.  I can't imagine I'd close many loans with this requirement.  Most of my clients do not have the time (nor do I) or desire to meet in person for something that can be handled in a few short minutes via phone or email.  That being said, I really value the clients that I connected with organically at a meet up or conference but it's less than half of my business.  The majority of my clients come from right here on BP and sometimes places like Instagram believe it or not.  References received range from coast to coast and I feel blessed to have this nationwide opportunity originating non conventional mortgages.

My advice would be this.  Don't work with any lender that you can't do a thorough vetting of yourself whether via verifying references, reviews, etc or using your best judgement.  If meeting face to face was an absolute requirement, you'll end up leaving money on the table.

Lastly, all commission based jobs rely on a bit of "prospecting" like going out whether in person or online and connecting with potential clients. However, the best LOs are probably not messaging you directly on LinkedIn with a sales pitch because they're busy handling inbound leads. That being said, my very first few mortgages came directly from cold calls and they were rate and term refinances where we saved the borrower a lot of money.  Looking back on it I can't say I'd have the same trust that they did in the kid stuttering nervously on his first few sales calls hahah.  The lenders doing the most volume now are the ones mastering online marketing and reaching back out to inbound leads.

You'll find the most successful loan officers/lenders on BP just chime in here and there with anecdotal advice but no sales pitch unless it's the marketplace section.

Best of luck and don't take my response to mean that you shouldn't go to as many meetups as possible!

Brittany Vigneault · Answer

Thanks for the responses!

Private Lenders Keep Reaching Out To Me, Are They Legit?

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