Private Money Lender

[Sara Enyart]

We are new to this. We found a “private money lender” through a post on a local real estate marketplace Facebook page. He offers 100% funding at a 5% interest rate. We submitted an application. The application asked for some basic information. No SSN or bank information. It did ask for the amount of the loan requested “in words” which I thought was a little strange, but we’re new to this, so I don’t know what’s normal and what’s not. All he has asked for to this point is a copy of my driver’s license and either a copy of a bank statement or pay stub (which we have not provided yet). From reading some of the posts, 5% interest rate and no website (and nothing comes up when I Google his name) are red flags. We’ve decided to step back and do what we should have done initially. We’re going to ask for his website, a number so we can call and chat, and references. Is there anything else we should ask or look for to know if this is a scam?

[Jeff S.]

All standard procedure and perfectly normal, @Sara Enyart. You can feel perfectly safe sending your personal ID, credit history, and bank account information to online strangers. When they ask for up-front fees, which will happen, you can rest assured they will cheerfully refund these if the loan doesn’t go through. It’s also very common for private lenders to provide 100% funding at rates just slightly above those offered by risk-free US T-Bills; especially to those brand new to the business.

Does any of this make sense to you? Me neither, yet others send this info and up-front money all the time.

Legitimate private lenders do not operate like this.

Sorry for the sarcasm, Sara, but you seem to know you already answered your own question. This is not only a scam but you’d be wise to cease all communications with this scoundrel and immediately change your bank account number if you’ve already provided it. It’s easy to print a check and clean you out.

Do yourself a favor and stay off the web when looking for money. You truly have no idea who you are speaking to and some of these scammers are very slick. This is a business based on relationships. That means face-to-face, eyeball-to-eyeball. Your best bet is to find your lenders locally at real estate clubs. There will be no shortage of these in Tulsa. Here’s a Meetup link to nearby real estate clubs in Tulsa, OK that could help you. Bring a list of informed questions. If you don’t know what to ask, this thread contains a long list of questions you can begin with: Private Money Lender – How to Qualify the Lender?

And if you think that asking for a website, calling to chat, and asking for references will help, they won’t. Websites and conversations with strangers you can’t verify mean nothing. We are currently going through this right now with someone spoofing our company and claiming to be me when he answers the phone. Read here and take heed: Private Lending Direct LLC is a SCAM and I Own the Company.

Be careful Sara and best of luck to you.