Does Bigger Pockets vet these hard money vendors?

Question

How does one know which ones are legitimate and which ones are scam? I saw comments about one hard money lender in particular and they were very bad reviews.

Ellis San Jose · Answer

Big red flags 1)they discourage you from using a 3rd party escrow 2) Terms to good to be true 3) No proof of previous loans in the geographic area 4) They want upfront money

Ellis San Jose · Answer

I doubt they have the time or resources to vet all lenders.  I suggest you either get a referral from active investors in your area or search property records of deals done in your area and see  who the active lenders are.

Tony Marcelle · Answer

@Jeff S. Thanks. I agree. Anybody can be anybody these days. I like being able to call someone from a local office or stop by to talk to them. Those links you provided are spot on. Good stuff.

Tony Marcelle · Answer

I have had lenders contact me in the past offering their loans. Now I realize that is one red flag that they are scammers. Real hard money lenders do not solicit business to some random person via text or email. I prefer local lenders with good terms I can work with. Would real estate agents know of any hard money lenders? I am assuming at least some of their clients may have used hard money to buy fix and flip properties off the MLS.

Ellis San Jose · Answer

Big red flags 1)They discourage you from using a 3rd party escrow 2) Terms to good to be true 3) No proof of previous loans in the geographic area 4) They want upfront money 5) They don't request a title report

Odie Ayaga · Answer

@Tony Marcelle I can't say where Lima lends personally as I haven't used them, but there's no shortage of lenders around that lend to most states. Alabama isn't an unusual area for lending. I will be a little unpopular here in saying that I've always been "upfront/application fees? walk away" but I've discovered a number of actual reputable lenders that do ask for upfront fees. They may be small or waiveable, but I think given how popular HGTV and whatnot have made flipping there have been a lot of applications from people who aren't going to actually pull the trigger. That's why I would stringently push recommendations from people. If a lender won't budge on waiving fees like that for sure be hesitant to work with them.

Tony Marcelle · Answer

@Dave DeMarinis Exactly. It is hard to tell which one is real and which is fake if they are both reaching out the same way. I know about those upfront fees. One guy was persistent in trying to hook me as a client by having to pay upfront fees. They always seem to find me out of nowhere trying to do business. LIke dude, how did you get my information?

@Ellis San Jose Number 2 and 4 seems quite familiar. I see those a lot.

Dave DeMarinis · Answer

I know many real Lenders who absolutely reach out directly and solicit business as well as doing significantly marketing. Unfortunately, the scammers are probably also reaching out directly. The biggest red flag I've seen by far is requesting/requiring an upfront application fee. NEVER, EVER pay that. I don't know any reputable lender collecting fees at application. The second biggest red flag I've seen is offering terms that are too good to be true.

All that said, you are right to be careful and do your due diligence.

Tony Marcelle · Answer

@Odie Ayaga The lenders that contacted were from gmail addresses. That is sign of scam in my opinion. Does Lima One do business in all states including Alabama?

Odie Ayaga · Answer

@Tony Marcelle I wouldn't actually say it's true that legitimate hard money lenders won't reach out via text or email. The lending space is very competitive now and various lenders employ a variety of marketing techniques to reach their clientele. If they're emailing you on a one on one basis perhaps that would fit your scenario, but many lenders will host events and through a number of other means will get your contact info such that you might find your name on their mailing lists. I get a number of emails from hard money lenders mailing lists that are all legitimate lenders that may be worth looking into. Local lenders can be good, but they can also be not so great depending on where "local" is. There are some national lenders such as Lima One that are spoken of well. So I wouldn't try to generalize in any way. It takes just putting the nose to the grindstone and talking to people to get a sense of what is available to you and what lenders may be a good fit for you.

Does Bigger Pockets vet these hard money vendors?

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