How can you tell if a lender is legit?
Member since 2023 · 11 posts · 9 votes
How can you tell if a lender is legit?
Most Popular Reply
Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesQuote from @Caitlyn Frizzelle:
I’m looking for non-conventional lenders and posted on FB groups for recommendations/contacts. I received quite a few replies directly from lenders themselves. How can I tell if a lender is legit?
Also, if you have any you’ve worked with I the past, would appreciate recommendations!
TIA
Mortgage brokers play a vital role in our industry - the good ones have access to financing options that borrowers don’t, they know how to package loans for the best chance of lender approval; they know which lenders are most likely to be interested in financing and at what terms; they can provide a realistic assessment of whether or not your desired interest rate, terms, etc are realistic.
In the non institutional money field you will pay 1-4 points in broker fees. This is in addition to the origination points you’ll pay to the actual lender - another2 -4 points.
Going directly to a LENDER can save you the broker fees - or possibly cost you the opportunity for a “better” loan. Especially if you don’t have a lot of experience.
Here’s a word of warning - most states do not require licensure for COMMERCIAL mortgage brokers, or mortgage brokers who specialize in business/investment purpose loans. As a result the quality of advice, service, and competence is all over the board. Besides the competent professionals, there are brokers who’ve never completed a deal and have little knowledge or experience; brokers who do nothing but resubmit loan requests to other brokers (daisychain) and brokers who disguise themselves as “lenders”.
Best way to determine who is “real”
1- recommendation from someone you know
2- recommendation from experienced investor
3- check their website for professional presentation, etc.
4- check their references
5- Google search
6- criminal background check
25 Replies
- 1yJonathan Taylor SmithBusiness MemberRental Property Investor · Durham / Raleigh (Triangle), NC · Member since 2015 · 841 posts · 802 votes
A legitimate Private Lender cares first and foremost about the deal / property, more so than they do about YOU - although you do matter in the equation as well. So, if they are asking for all your personal details (DOB, SSN, etc...) and/or they want some form of upfront payment before they've even evaluated the deal... SCAM ALERT!
The NON-Professional Private Lenders I've worked with over the years have never even asked for my DOB, SSN or any money. But then they were also not folks I found online. They were people I encountered locally, as I went about my daily routine - and telling people what I do. So they had other means to vet me.
But Professional Lenders are far more likely to ask for those private details going in. However, even in that case, I've not been asked for upfront money other than to obtain a credit report. I also check their license, reviews, etc...
Blue Chariot Realty & Management4.915 Reviews- Member since 2023 · 11 posts · 9 votes1yThank you, Jonathan!
Quote from @Jonathan Taylor Smith:
A legitimate Private Lender cares first and foremost about the deal / property, more so than they do about YOU - although you do matter in the equation as well. So, if they are asking for all your personal details (DOB, SSN, etc...) and/or they want some form of upfront payment before they've even evaluated the deal... SCAM ALERT!
The NON-Professional Private Lenders I've worked with over the years have never even asked for my DOB, SSN or any money. But then they were also not folks I found online. They were people I encountered locally, as I went about my daily routine - and telling people what I do. So they had other means to vet me.
But Professional Lenders are far more likely to ask for those private details going in. However, even in that case, I've not been asked for upfront money other than to obtain a credit report. I also check their license, reviews, etc...
- Real Estate Lender · Newport, RI · Member since 2014 · 182 posts · 33 votes1y
Caitlyn
are you looking for a private lender or just a lender that does non-conventional loans? If it's a lender that does non-conventional loans google NMLS consumer access and you can look them up
- Member since 2023 · 11 posts · 9 votes1yThank you! I assumed a resource like that existed but had a hard time coming across it.
Quote from @Joe Impagliazzo:
Caitlyn
are you looking for a private lender or just a lender that does non-conventional loans? If it's a lender that does non-conventional loans google NMLS consumer access and you can look them up
I am open to private lenders as well. I’m hoping to find a lender that doesn’t require 25% down on a non-flip investment property. - Real Estate Lender · Newport, RI · Member since 2014 · 182 posts · 33 votes1yLenders usually have to post there NMLS license number, so you can track it by that. There will be one for the Lender and one for the Loan Officer. You mentioned not having to put 25% down, what type of property are you thinking of.... single family, 2 family etc. Also, what type of condition would the property be in?
Quote from @Caitlyn Frizzelle:
Thank you! I assumed a resource like that existed but had a hard time coming across it.Quote from @Joe Impagliazzo:
Caitlyn
are you looking for a private lender or just a lender that does non-conventional loans? If it's a lender that does non-conventional loans google NMLS consumer access and you can look them up
I am open to private lenders as well. I’m hoping to find a lender that doesn’t require 25% down on a non-flip investment property.
- 1yMike GrudzienPro MemberLender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
Well, maybe I would look on BiggerPockets, not Facebook.....
- 1yMike GrudzienPro MemberLender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
I would also check references. Check the Better Business Bureau.
- Lender · Lake Havasu City, AZ · Member since 2024 · 700 posts · 284 votes1y
Actually licensed by NMLS & Reviews will be your best bet.
- 1yDenise SuppleeBusiness MemberRealtor · Willow Grove, PA · Member since 2017 · 995 posts · 647 votes
Look for reviews on Yelp, Google, etc. Search here on Bigger Pockets for their name and see if anything comes up.
Spark Rental Co-Investing Club582 Reviews - 1yErik EstradaBusiness MemberLender · Member since 2022 · 6k+ posts · 1k+ votes
I would check for a NMLS number, Reviews, Presence Online, and interview them. Honestly, you can tell with one quick call, who is wasting your time and who is actually experienced to get you to the closing table. A lot of the inexperienced LOs will throw out term sheets to get you in the door and then find everything to change the terms during the process.
It is best if the LO gets all the facts upfront and then structures the deal accordingly. Sure there are variables we cannot control such as insurance, HOAs, or the appraisal. However if you are honest, and know your property and situation well, you will not run into problems with LOs changing terms on you last minute.
LuxePrivate Investments LLC 572 Reviews - 1yKo KashiwagiPro MemberLender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
Look up their NMLS, online reviews, company website, social pages!
- 1yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
I'd go to local meetups and get recommendations directly from investors.
Some conventional lenders like regional banks may also offer <25% down. It's tough to get less than 20% these days.
I would not start with a "private" lender - a true private lender is someone already in your network like your uncle or your dentist, and so no vetting is required. If a random person reaches out to you on FB and says they're a "private" lender - do not work with that person.
Hope this helps
- Lender · Member since 2021 · 495 posts · 130 votes1yAs others have said, many will have an NMLS. There is also something to using your instincts and best judgement. If someone is telling you things too good to be true, creating unnecessary pressure, etc. it’s usually a red flag. Many non conventional lenders here that can help!
Quote from @Caitlyn Frizzelle:
I’m looking for non-conventional lenders and posted on FB groups for recommendations/contacts. I received quite a few replies directly from lenders themselves. How can I tell if a lender is legit?
Also, if you have any you’ve worked with I the past, would appreciate recommendations!TIA
- 1yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votesFirst, determine if the “lender” in question is an actual LENDER, or a mortgage BROKER.
Quote from @Caitlyn Frizzelle:
I’m looking for non-conventional lenders and posted on FB groups for recommendations/contacts. I received quite a few replies directly from lenders themselves. How can I tell if a lender is legit?
Also, if you have any you’ve worked with I the past, would appreciate recommendations!TIA
Mortgage brokers play a vital role in our industry - the good ones have access to financing options that borrowers don’t, they know how to package loans for the best chance of lender approval; they know which lenders are most likely to be interested in financing and at what terms; they can provide a realistic assessment of whether or not your desired interest rate, terms, etc are realistic.
In the non institutional money field you will pay 1-4 points in broker fees. This is in addition to the origination points you’ll pay to the actual lender - another2 -4 points.
Going directly to a LENDER can save you the broker fees - or possibly cost you the opportunity for a “better” loan. Especially if you don’t have a lot of experience.
Here’s a word of warning - most states do not require licensure for COMMERCIAL mortgage brokers, or mortgage brokers who specialize in business/investment purpose loans. As a result the quality of advice, service, and competence is all over the board. Besides the competent professionals, there are brokers who’ve never completed a deal and have little knowledge or experience; brokers who do nothing but resubmit loan requests to other brokers (daisychain) and brokers who disguise themselves as “lenders”.
Best way to determine who is “real”
1- recommendation from someone you know
2- recommendation from experienced investor
3- check their website for professional presentation, etc.
4- check their references
5- Google search
6- criminal background check - 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Katie Smith:
Hi Caitlyn! Look at reviews! Have a phone call with them! Make sure they can offer what you're looking for and enjoy working with them. Never pay any upfront fees. Are you looking to get a fix and flip loan or a DSCR?
on said phone call make sure they speak good english. Also bad grammer is a dead give away of a fake lender.. go to Ingrid Robinson site she describe fake lenders and how to avoid them very well.
your playing with fire with facebook your going to get a lot of replys by Crooks who are going to tell you what you want to hear and tell you this too good to be true terms just send in 500.00 or 1k commitment fee your all approved .. you will never see the money again and you will never get a loan.
As Don said above while state license and NMLS is required in about 15 states the rest its not so its wild wild west.. coming here will probably save you a bad experience.. BP lenders are somewhat vetted from what I have seen so maybe start with some of the lenders on this site that have made a lot of posts and are consistent in their message.. And remember NO UP FRONT FEES other than appraisal.. All funds go through title company or closing attorney. - Lender · TN · Member since 2019 · 13 posts · 3 votes1y
Please just message me if you are needing financing for any deal. Small to large. Most asset types. I only work with approved and creditable lenders, across the nation. I can save you, most importantly, lots of time and money! Most brokers and lenders will waste time and are unable to provide when it comes down to it.
- Member since 2023 · 11 posts · 9 votes1y
Thank you everyone for your insight!
- Member since 2023 · 11 posts · 9 votes1y
Quote from @Jay Hinrichs:
Quote from @Katie Smith:
Hi Caitlyn! Look at reviews! Have a phone call with them! Make sure they can offer what you're looking for and enjoy working with them. Never pay any upfront fees. Are you looking to get a fix and flip loan or a DSCR?
on said phone call make sure they speak good english. Also bad grammer is a dead give away of a fake lender.. go to Ingrid Robinson site she describe fake lenders and how to avoid them very well.
your playing with fire with facebook your going to get a lot of replys by Crooks who are going to tell you what you want to hear and tell you this too good to be true terms just send in 500.00 or 1k commitment fee your all approved .. you will never see the money again and you will never get a loan.
As Don said above while state license and NMLS is required in about 15 states the rest its not so its wild wild west.. coming here will probably save you a bad experience.. BP lenders are somewhat vetted from what I have seen so maybe start with some of the lenders on this site that have made a lot of posts and are consistent in their message.. And remember NO UP FRONT FEES other than appraisal.. All funds go through title company or closing attorney.Thanks, Jay.
All very helpful info, and well noted regarding FB…I had posted in an investors group hoping to get recommendations from other investors, but unfortunately only got solicitations hence me turning to BP instead!
Also, small world! I grew up in LO ;) - 1yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Caitlyn Frizzelle:
Quote from @Jay Hinrichs:
Quote from @Katie Smith:
Hi Caitlyn! Look at reviews! Have a phone call with them! Make sure they can offer what you're looking for and enjoy working with them. Never pay any upfront fees. Are you looking to get a fix and flip loan or a DSCR?
on said phone call make sure they speak good english. Also bad grammer is a dead give away of a fake lender.. go to Ingrid Robinson site she describe fake lenders and how to avoid them very well.
your playing with fire with facebook your going to get a lot of replys by Crooks who are going to tell you what you want to hear and tell you this too good to be true terms just send in 500.00 or 1k commitment fee your all approved .. you will never see the money again and you will never get a loan.
As Don said above while state license and NMLS is required in about 15 states the rest its not so its wild wild west.. coming here will probably save you a bad experience.. BP lenders are somewhat vetted from what I have seen so maybe start with some of the lenders on this site that have made a lot of posts and are consistent in their message.. And remember NO UP FRONT FEES other than appraisal.. All funds go through title company or closing attorney.Thanks, Jay.
All very helpful info, and well noted regarding FB…I had posted in an investors group hoping to get recommendations from other investors, but unfortunately only got solicitations hence me turning to BP instead!
Also, small world! I grew up in LO ;)
PS if your looking for property in Toledo I have some really good clients I fund there and I am sure they could help you as well.. Yup Small world LO has treated us well.. - Lender · Riverside, CA · Member since 2017 · 248 posts · 98 votes1y
@Caitlyn Frizzelle To check to see if a lender is legit, you can look at their website, their social media presence and quite honestly pick up the phone and call and talk to them -- see if they make the time to answer your questions, if they answer and if they don't how timely their response to you is.... Do you gel and does this feel like someone you want tobe a part of your financial journey. Ultimately the lender you work with should be a relationship and you should talk to more than one. Many people will drop a note that they can do your loans or ask you to DM, but if you post something, do they reach out other than to say "I can do it"? Make sure they take the time to understand you - your strategy, your financial situation, your plan for growth and your experience. Understand too, that every lender has a box within which they are comfortable to lend and that impacts their terms and leverage and a "no" from one is not a "no" from all. And I would expand your box to include lenders and brokers. I think people often paint going the broker route as a bad thing but often it can mean signficantly more options and difference between getting a deal done or not. Also, find out if they are investors themselves... that's not a requirement by any means, but it helps to understand their knowledge base and if they have sat in "your shoes".
- Specialist · NJ · Member since 2022 · 1k+ posts · 653 votes1y
If it is a residential 1 - 4 loan for bridge or DSCR then there's a handful of big box lenders who do most of he business. Other "lenders" and brokers sell their products. If you start dealing with 5+ and even like 20 units or luxury ground up or land deals etc then the lenders are more fragmented.
By "real" I'm thinking you mean not a scammer. If that's your worry then do not send any money because a scammer will eventually have to ask you for something. Anybody trying to get money or commission out of you early usually is not on the up and up.
However, if by "real" you mean good at what they do, that's hard to tell. You may be with a "real" loan officer or broker but the loan may still be a nightmare.
I understand that's its tough to vet someone when you don't know. Be careful of social media and such, scammers are great at it. Just because someone has a website and an instagram doesn't mean they're real.
- 1yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
If you want a “private lender” who is actually an INDIVIDUAL investing for their own portfolio, rather than a COMPANY providing “private money” (non institutional financing), you’ll have to look a little harder. It’s more a “one on one” type networking; real estate meetups, referrals, and people with self directed retirement funds seem to be the best bet.
I disagree with some of the advice here. Since you're looking for non-conventional lenders, @Caitlyn Frizzelle, I assume you're seeking a business-purpose loan. Correct?
An NMLS registration is only required for consumer-purpose loans. Lenders who exclusively provide business-purpose loans—such as for buy-and-hold properties or flips—do not need to be registered with the NMLS. For example, we are licensed in CA, only make business-purpose loans, and are not required to be registered on the NMLS. Nor are we. (By the way, the NMLS is a registration portal, not a license. Jeeze.)
Unless a lender explicitly states that they also offer consumer-purpose loans, not being listed on the NMLS is not a red flag. It does not automatically indicate a scam.
Similarly, the Better Business Bureau (BBB) is not a reliable source. The organization has been widely criticized for favoring businesses that pay membership fees, leading to inflated ratings.
You didn’t mention which state the property is in. If it's in a state that requires a lending license—such as California—you should be able to verify the lender’s license. However, I don’t believe Ohio requires a license for business-purpose real estate loans, so this may not be helpful in your case.
Here’s the bottom line: No one here can give you a foolproof way to identify scammers as long as you're willing to borrow anonymously. LinkedIn, Facebook, Craigslist, Connected Investors, and most other online platforms are cesspools. Even the lender list on BiggerPockets isn’t vetted.
Change your approach. As private lenders who loan our own money, we don’t lend to anonymous borrowers — and you shouldn’t borrow that way. The safest way to lend and to borrow is through face-to-face relationships.
Local real estate clubs are your best bet. Here’s a Meetup link to real estate clubs in Toledo, OH. There are quite a few. When you attend, introduce yourself to the club owner and ask which lenders regularly attend and have the best reputations. Take a few out to lunch, ask informed questions, and build real relationships.
Never rely on online strangers to find your money, Caitlyn.
- 1yEngelo RumoraBusiness MemberInvestor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
Quote from @Jay Hinrichs:
Quote from @Caitlyn Frizzelle:
Quote from @Jay Hinrichs:
Quote from @Katie Smith:
Hi Caitlyn! Look at reviews! Have a phone call with them! Make sure they can offer what you're looking for and enjoy working with them. Never pay any upfront fees. Are you looking to get a fix and flip loan or a DSCR?
on said phone call make sure they speak good english. Also bad grammer is a dead give away of a fake lender.. go to Ingrid Robinson site she describe fake lenders and how to avoid them very well.
your playing with fire with facebook your going to get a lot of replys by Crooks who are going to tell you what you want to hear and tell you this too good to be true terms just send in 500.00 or 1k commitment fee your all approved .. you will never see the money again and you will never get a loan.
As Don said above while state license and NMLS is required in about 15 states the rest its not so its wild wild west.. coming here will probably save you a bad experience.. BP lenders are somewhat vetted from what I have seen so maybe start with some of the lenders on this site that have made a lot of posts and are consistent in their message.. And remember NO UP FRONT FEES other than appraisal.. All funds go through title company or closing attorney.Thanks, Jay.
All very helpful info, and well noted regarding FB…I had posted in an investors group hoping to get recommendations from other investors, but unfortunately only got solicitations hence me turning to BP instead!
Also, small world! I grew up in LO ;)
PS if your looking for property in Toledo I have some really good clients I fund there and I am sure they could help you as well.. Yup Small world LO has treated us well..
I'm jealous mate haha
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