How to Spot a Fake Private Money Lender (PML) – Red Flags to Watch For

[Stanley Yeldell]

Hey BP community,

As a private money lender (PML) myself, I’ve seen an increasing number of fake lenders popping up, especially on social media and online forums. If you're looking for funding, it's crucial to spot red flags before handing over personal info or paying unnecessary fees.

🚩 Common Scammer Tactics:

1️⃣ Upfront Fees Before Approval – Legit lenders might charge appraisal or legal fees, but beware of anyone demanding money before they even approve your loan.

2️⃣ No Due Diligence – A real PML will ask about the deal, your experience, exit strategy, and collateral—if they’re offering money with no questions asked, that’s a red flag.

3️⃣ Guaranteed Funding – No lender can guarantee a loan without reviewing the property and risk factors first.

4️⃣ Suspicious Communication – Poor grammar, generic email addresses (e.g., @gmail.com), and messaging through WhatsApp or Facebook DMs instead of business platforms.

5️⃣ Too Good to Be True Terms – If someone offers 100% financing, ultra-low interest, or “no credit check” with no collateral, be skeptical.

✅ How to Verify a Legit Private Lender:

🔹 Ask for references – Have they funded deals for other investors? Legitimate lenders should be able to provide past borrower testimonials.

🔹 Check their business registration – Are they licensed, or do they have a company website and verifiable online presence?

🔹 Talk to past borrowers – If they refuse to connect you with real clients, it’s a red flag.

🔹 Use escrow/title companies – Never send money directly to a lender—funds should go through a neutral third party.

I personally vet deals and investors before funding, and I always tell people to trust but verify. If you’re unsure about a lender, feel free to drop their details here or DM me—I’ll gladly help verify.

Have you ever come across a shady lender? Let’s discuss!