Private money for fix and flip

[Kyle Smith]

Hi, I am looking for private money for fix and flip and I’ve been getting emails from “private lenders” from being active in Facebook groups. How can I tell if these are legit private lenders? I have one saying I can have an interest rate of 3% which seems too good to be true. Thanks in advance! 

[Edwin Epperson]

@Kyle Smith the EASIEST and most surefire way to know if you're dealing with a TRUE private lender, ask how they recorded their name in the mortgage or Deed of Trust? Ask them what county and state that MTG/ DOT was recorded, and get several. Then simply go to that county's online records website and do a quick search. Also, I would caution you about getting wrapped around the axel of the often misused term "Private Lender" There are THREE types of lenders that investors need to be aware exists, Hard Money, Private Lenders, and Private Money. Most courses and RE Investment seminars teach RE Investors to go after "Private Lenders" and so that is what you do. The problem is that Hard Money lenders are now calling themselves "private Lenders" (I don't know how they justify that), and Private Lenders "PL" along with Hard Money lenders "HML" are running businesses. We have profit goals, and marketing budgets and are running businesses. What the courses and Gurus tell you are "Private Lenders' are in fact called "Private Money". I've done a video series covering the differences so I won't dive into it here, but the fact remains, you are more than likely trying to find "Private Money" but your asking for "Private Lenders". You will not find "Private Money on any social media platform. These are relational investors. They will only work with those they know, like, and trust. When you make a post asking for "PL" you will only find businesses offering loans, which will be vastly different in terms and rates than what you were taught, or you will run into scams. If you are borrowing funds for RE investments, then the bottom going rate for new investors (which I assume you are due to the question) should be expected to start at 10% annually and go up from there. 3% screams red flags and scammer alert. Also, look for their loan limits. If the advertiser is advertising $50K - $50M ... beware. They are not private and more than likely just a scam. Also, look for email addresses and websites. Find out if you can see what state the business is located in. Do a quick search on that state's corp division website to confirm they are operating a business. Again you WILL NOT find "Private Money" advertising on FB or any other social media, so that type of money will not throw itself out there. Private Lenders (owning and running a business) do exist but they are running a business to make a profit. If your doing deals in FL, let me know. I'm a PL, but I run my business and I only work with investors.