Low interest lenders on Linked In

[Steven Tomes]

I am seeing a lot of people/companies on linked in that state private lending. Does anyone have experience with these lenders? Many are stating rates of around 5 percent.

[Jeff S.]

Unless your mom is doing you a favor, @Steven Tomes, there is not a legitimate private/hard money lender on the face of the Earth lending money at 5%. Their cost of money is higher. After points and fees, you can expect to spend twice that. The MO here is to suck you in with the promise of cheap money, obtain an up-front fee, possibly your personal financial information, and then disappear.

Private/hard money lending has exploded, so there’s no reason to take a chance with strangers you meet on the web. Lending is a business based on relationships, not online anonymity. There are just too many scammers out there and it’s impossible to tell who is who or even whose website is legit. Similarly, Facebook, LinkedIn, Craigslist, Connected Investors, and most other online sources like these are cesspools. Even the lender list on BP is not vetted. In fact, there are just a few sites that I know who actually verify their lenders and LinkedIn is certainly not one of them.

It's safest to find your money at local real estate clubs easily found on Meetup. 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.

Meanwhile, Steven, don’t swim in the cesspool.

[Mike Klarman]

Six months ago I didn't even have to sell the interest rate.  It was in the low 3s.  This is for 30 year loans.  Rates have doubled.  Look, a true private lender lending their own money can give it to you at whatever they want, but the truth is they really go by the marketplace.  Right now the on the buy down chart the floor is the low 6s.  I just did a 30 year cash out at 6.19% and they paid 4 points for that number.

Again, it matters what the money is for too.  For a purchase and rehab the rates are higher because the loan is only 12 months long and interest only payments.  The absolute best you can do is 7.99% and you'll need more qualifications than you have.  If you have 3 for experience then you can get low 8s.  8.25% or so.  If you are a complete newbie then you are going to get 12% and be happy with that because most banks won't even lend to you.

Me, I like to vet on the phone.  I call people and ask questions.  You can tell a lot about the experience of the person you are speaking with if you throw question after question at them.  

If you wanna know about lending guidelines or see an example of a doc list that you'll need to come up with for a loan feel free to reach out.  I'd be happy to help get you more seasoned in the lending process.