How do I vet a non local private lender?

6 Replies

Hello, I am still learning how to do my due diligence. I need some sound advice on how I go about vetting a private investor that has contacted me from BP. 

As a piece of reference, his name is Steven Wilson. I would like to accept his offer, but want to be sure I’m not being led into a scam of sorts. 

Please help me out fellow BP’ers😉😁

Originally posted by @Isaac Chun :

Hello, I am still learning how to do my due diligence. I need some sound advice on how I go about vetting a private investor that has contacted me from BP. 

As a piece of reference, his name is Steven Wilson. I would like to accept his offer, but want to be sure I’m not being led into a scam of sorts. 

Please help me out fellow BP’ers😉😁

 There a re a lot of things you can do but nothing is perfect.

You can ask if he has lent on other projects and has references. You can ask if he is licensed. Some lenders have to be licensed, some don't, but it's a good indicator if he is. Ask what entity name he would be lending from and check RipOffReport.com to see if there are any complaints. Ask how much the application fee is. If it is more than $0 ask why. (There shouldn't be any upfront fees) Ask if he lends against the project or against your credit. Ask how many points he charges and how much the "junk fees" are. Ask him if the loan has a prepayment penalty or a balloon payment. Ask if he releases all funds at closing or does he have "hold backs". Ask what documentation he requires to do the loan. Are you comfortable giving him the documentation?

Nevada is easily the most restrictive state in the nation, to loan money, @Isaac Chun. For the purposes of making a real estate loan, NV does not distinguish between business and consumer purpose loans. Your lender must be both a licensed Nevada broker and possess an NMLS registration to originate any real estate loan in this state. It's a rare out-of-state private lender has both of these.

The real answer to your question asking, "How do I vet a non local private lender?" is you don't. You find your money locally, especially in Nevada. Lending is a business based on relationships, Isaac; as is most business. These are formed face-to-face. Here's a list of Meetups in the Las Vegas area you should consider attending, armed with a list of informed questions to ask the lenders in attendance. There will be many.

Vetting private lenders has been addressed many times on this board so you should do a search. Here are some relevant threads that will provide some questions you can ask:

Private Money Lender – How to Qualify the Lender?

Questions for Hard Money Lenders

Originally posted by Account Closed:
@Isaac Chun

Easy - one him through truthfinder.com, if there is anything remotely criminal - it will find it. You get a 30 day trial for free.

 I also was in high tech in Seattle. That is, until I became "a real estate mogul" Quote From your profile ;-). I was in the high tech industry in the 80's. Technology changes. Real estate doesn't.  When do you make the jump?

@Account Closed Congrats on being a mogul Mike =) .... I’d say about 3-4 years ago when I was running a 70 million$ annual revenue tech company as the COO and seeing the founders line their pockets with our hard earned annual net income for 4 years. I was just a highly paid employee. And then watching all my friends become 1% via REI between 2014-now, and none of them are remotely good at math. I figure - if they have half the intelligence and 10x wealth, I’m sure to be as successful. Plus flipping 6 homes on the side and making 600K net helps provide more concrete data. Now I’m doing flips, hard money lending, and moving into MF commercial REI to be more well rounded. Next stop syndication for larger deals. I love the fact that as you learn and network more, just like in tech, you can make exponentially more $ - but in REI, you have more control.

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