Facebook "Private Lenders"

[Stephen Tong]

Im sure everyone in this forum has seen or been contacted by "Private Lenders" on Facebook. I was recently offered this...

Terms are flexibleJohnInterest Rate: 5.5% (Buy and Hold), 8.5% (Fix and Flip), Cashout/Refi (4.5%) Purchase 90%, rehab 100%, Origination Cost: 3pts, 10% Down Payment, Two (2) phase drawsJohnNO FICOClosing 7-10 business days, 1-30 years, Asset-based, Interest-only paymentJohn. And no prepayment penalty.!

Has anyone actually worked with any of the so called private lenders on Facebook that post on all the RE sites? Legit or scam? 

Thanks,

Stephen 

[Jeff S.]

“I'm not saying that's not real because I don't know anything about this lender …”

I will. This is a scam, @Alexis Stevens. Flat out, as are most of the lenders who advertise like this. With the Prime Rate at 7.75% and 1 year zero-risk treasuries at 4.3%, do you actually think anyone is going to lend money to you at 5.5%? Their cost of capital and opportunity costs are higher.

Don’t get hung up on what lenders call themselves. It changes nothing about whether they are real or not. This seems to bother a lot of people here. Plus it doesn’t respond to the question.

Unless it's your mom, legitimate private/hard money lenders are currently charging anywhere in the 10% to 15% APR ballpark plus a few points – and rising.

Like much in real estate, lending is a business based on relationships, not online anonymity. Face-to-face at local real estate clubs is your safest bet. Here, you’ll be able to ask others in the club for recommendations in addition to the club operator, who will know the reputable lenders that regularly attend. Prepare a list of informed questions, such as these, that you can ask potential lenders (at lunch!!).

Never rely on strangers you meet on the web to find your money.  You'll get your lunch eaten.