Vetting A private Investor

[Jeremy Hazelwood]

In my search for Private Investors for my rehabs, I have came across so many fakes, I lost money back when I first started and I even met the guy face to face! Of course I learned never pay up front fees. Moving ahead to the present, I have had random calls and emails after I put some of my projects out there telling me they want to lend. What is the best way to Vet a private lender who says they are lending with their own money or with partners?? I want to be cordial and not seem suspicious but when I am paying 13% and somebody calls me and says they will lend at 6% only I am a bit boggled.. Obviously that is way more than what the bank would pay if its just sitting in an account.. but......

[Rick Pozos]

Go to your local REIA and find some of the sponsors who are HMLs. If you want to call them private lenders, then do that, but they are hard money lenders. When it is a COMPANY that borrows from a line of credit, their own cash or from a fund of some sort, then they are hard money lenders.

A private lender is someone who maybe has 200k or 2 or 3mil in the bank or in their own 401k or ira and wants to lend it to friends or family. Or maybe it is my aunt who had 40k in a CD at a bank and lent it to me to buy a little house and she got 6% instead of .25%.

As far as the vetting, ask other investors who are friends who they are using. You, as an investor, should know others who are doing what you are doing. If you dont, you should. Network and find out who the good rate and term hard money lenders are in your area. They should be companies who are easy to work with and help facilitate the transactions. It is not always about the best rate, but the ease at which you can get the property financed, rehabbed and sold.

Dont even think about someone who is soliciting you online. Pay the yearly dues to a REIA and meet some people, NETWORK locally.