Seeking Advice from BiggerPockets Community: Loan Direct LTD Legitimacy?

Question

Hello BiggerPockets Community,

I hope this post finds you all well. I am reaching out for some valuable insights and advice regarding an opportunity that has come my way, and your collective wisdom could make a significant impact.

I've been in contact with Loan Direct LTD, particularly with James Baldwin, who claims to be a private lender offering various financing options for real estate projects. However, given the critical nature of financial transactions, especially in the real estate realm, I'm seeking your expertise to determine the legitimacy of this opportunity.

Here are some key details:

1. Lender Information:

- Company: Loan Direct LTD

- Loan Officer: James Baldwin

2. Loan Details:

- Interest Rate: 3%

- Loan Duration: Up to 30 years

- Maximum Loan Amount: $10M

- Documentation Fee: $720

- Approval and Funding Time: 48 hours

3. Reference Testimonial:

- Positive feedback from a reference named Paul who took a loan for rentals.

4. Questions for Consideration:

- Is anyone familiar with Loan Direct LTD or James Baldwin?

- Has anyone else taken a loan with similar terms?

- What legal documentation should I request to ensure transparency?

- Are there any red flags or cautionary aspects I should be aware of?

- How common is it to find loans with these terms in the industry?

I believe in the power of community knowledge, and I'm reaching out to you, the seasoned investors and professionals, for guidance. Your experiences and insights can be invaluable in helping me make an informed decision.

Please feel free to share your thoughts, experiences, or any relevant information. Your input is highly appreciated.

Thank you for being an amazing community!

Best regards,

Louis Fernandes

Chris Seveney · Answer

@Louis FernandesDo you really think someone would lend a stranger money at 3% when you could invest it risk free for 5%?

Patrick Roberts · Answer

I see this kind of thing in the FB groups regularly and people are always like, "ooo me me me I want a loan." I just stare in disbelief and think that this cannot be real life...

Andrew Postell · Answer

@Louis Fernandes I would always recommend to lean on other investors that are in your market. If they have worked with them, then you have a reference. I certainly don't want to knock how people advertise or get business...but getting a recommendation from someone who has already vetted that lender helps out considerably. Read this post HERE to read more on this topic.

Andrew Reising · Answer

This sounds like you are about to get scammed or you are advertising a scam.

Seth Claiborne · Answer

Avoid! They just asked me for an $1,800 for an application fee for a 3% loan up to 50mil. If it seems too good to be true, it is.

Jay Hurst · Answer

Still a scam.

Andrey Salamakha · Answer

This is what I got from John Waddell at loandirectltd.com This website does not work. What do you think?"You should carefully review the terms of the loan, before you agree on proceeding with the loan process. ...Here is the TERMS AND CONDITION review and get back to me immediately.{1} The applicant will start the repayment of loan at the end of every month starting from 6 months after loan has been transferred, the loan is charged at 3% interest rate.{2} Failure to pay back the loan at this expected date/period, legal actions will be taken against the applicant by our attorney immediately. {3} Applicant who is unable to meet with the repayment will be given 2 weeks more as a grace period before legal actions will be taken. {4} Note: As soon as you in agreement with the terms and condition below your loan will be approved by the governmental body so as the loan papers can be processed. {5} Note: The borrower will be responsible for the loan processing/documentation fee and this is the only fee expected to pay for this transaction to have your loan transferred to you as soon as possible, NOTE: This payment will not be deducted or added to the loan IT IS PAID UPFRONT $1075.00. * Your inability to pay or agree to the payment of the upfront fee, means you are incompetent of repaying the loan. It is the only fee attached to the loan process and it shows your commitment in paying the loan at the agreed period.{6} Full Early Settlement: * If you want to pay off the entire loan early, you must request a settlement quotation from us. We will confirm to you in writing the amount required to settle your loan in full. This settlement quotation is valid for twenty eight days from the date you request it.* Your settlement quotation will include interest up to and including this date. In addition, in accordance with the regulations made under the Consumer Credit Act, if your loan term is greater than 12 months you will pay an additional 30 days interest. If you decide to settle your loan we must receive the amount detailed in the settlement quotation by the stated date.{7}. Our right to demand earlier payment:* We may demand immediate and full repayment of your loan if:*. You gave us false or incorrect information when you applied for the loan; or* You are more than fourteen days overdue with any amount you owe us..* If you fall behind with your repayments we may pass information about the amount you owe to a credit reference agency. Credit reference agencies record this information and companies may use it to assess any future loan/credit applications you might make. This may affect your ability to get credit. In light of the above explanations, The information below vividly illustrates the repayment schedule for the loan.MONTHLY LOAN REPAYMENT PLAN* Loan Balance: $325,000.00* Loan Interest Rate : 3%* Loan Term: 20 Years* Monthly Loan Payment: $1,802.44* Number of Payments: 240* Total Interest Paid: $107,586.13* Total of 240 Payments: $432,586.13NOTE: The monthly loan payment was calculated at 240 payments of $1,802.44In good fate, If you fully agree to the terms ,condition and repayment plan you will get back to us with a scan copy of any form of id card for verification because your loan is undergoing approval by the board of directors in and a positive result will be out soon,you will be approve of your loan after finding all information are genuine if otherwise you will be declined of your loan so applicant are advise to provide real information for easy approval of loan to them.... Please email me your valid ID card for identification before we proceed further.Awaiting your swift response immediately.Thank You.

Charles Kannair · Answer

Found this post when I was researching the same 3% Lender: http://loandirectltd.com is the site, and someone Named Duke Bellingham. My spider sense says this is on the "too good to be true" side of a scam vs. not a scam. Unless these folks are the money managers for a money laundering scheme designed to clean blocks of cash with large denominations and private party placement and don't care about 5% US Bond scrutiny (sovereign wealth comes to mind), my first thought when I saw the 3% interest rate was skepticism. I agree with the previous reply about leveraging only people with a history of successful deals. Giving the benefit of the doubt, who wants to go first? I am concerned that the lack of NML licensing/certification is certainly apparent in the emails and the website is a red-light. I admit that the allure of interest-only payment to drive insane profitability from cash flows is attractive; however, I don't see a standard process that the lender follows, but it may just be the affiliate/broker representing them who isn't very formal. Further, he's using an @gmail.com email address—don't get me wrong, I run my RE business through my primary @gmail accounts set up for the LLCs, but as a legitimate tax-paying lending company? Given the last commenter's advice about waiting for someone with experience to chime in the first time, that someone has to take a risk... the issue is that there is a high likelihood it will be either a loan-to-own lender looking to obtain functioning properties or a scam.If it's true, they would have SO much business; whatever funds they have available, they would be empty in 1 month or less because that would be the best deal in town if it's true. I've not seen any other documents regarding the legitimacy of this lender. I feel like I'm folding a pair of pocket aces, but I have to play the game with discipline, or you lose your stake. (Poker reference for those that play Texas hold'em...