How to legitimize a private money lender

[Izaac Rudd]

I was searching the BRRRR group on Facebook and came across this post. How do I know if it's a scam or not? I reached out but he won't talk on the phone. Wants a $1870 fee up front and only 5% interest for the amount I need. Seems off but would like your input.

[Jeff S.]

“Does seem sketchy but could be legit.”

No, sorry, not even close. You’ll waste a lot of time and lose a lot of money dealing with these scoundrels, @Izaac Rudd. Legitimate lenders don’t ask for upfront fees like this, they won’t loan 100% to someone they don’t know, and their cost of money is more than 5%. In fact, if you can really borrow money from them at 5%, then take all they have. You could loan it out at two to three times that and earn the spread.

Facebook, LinkedIn, Craigslist, Connected Investors, and most other online sources like these are cesspools. Even the lender list on BP is not vetted.

Lending is a business based on relationships, not online anonymity. Stay off the web when looking for money. There are just too many scammers out there and it’s impossible to tell who is who or even whose website is legit.

Local real estate clubs are your best bet; face-to-face. You would go to lunch, bring a list of informed questions, and develop a relationship. There is almost never a reason to do business with an online stranger.

Until we can socialize again, your best option is to go to Meetup.com and call some local real estate club operators. Ask which lenders regularly attend(ed) their club and who have the best reputations. Call these people and have a conversation with that same list of questions. Never rely on anonymous strangers you met on the web to find your money, Izaac.