How to recognise fraudulent lenders?

[Marina Kimak]

I joined this site just recently, upon my decision to turn my passion for real estate into a serious business. I found a great deal and developed a sustainable business plan, I found myself in front of the major step: funding it. After searching on the internet, on Bigger Pockets and on LinkedIn among many Angel investors, RE groups, crowd funding platforms and private investors, I received many offers. Some of them were just kinda fishy. Investors without company, or address or phone number, or from other countries. Most of them seriously challenged with English language and spelling, proposing a funding anywhere from 2% to 12%. Nobody asked anything about the project, just my name, address and bank account. I was playing along for a while, asking questions about their legal structure, location etc - that stayed without reply. However, sooner or later every one of them (both men and women) requested a payment of "origination fee" or "wire transfer fee" that amount anywhere from 300$ to 3000$. 

I am curious to know if anybody here had similar experiences and how did you handle them? Maybe it would be helpful to create a database of names and emails of such unscrupulous people who are praying and trying to scam RE entrepreneurs. Your feedback would be appreciate.

[Jay Hinrichs]

@Marina Kimak  no need to pay money to figure this out.

first off I can see how people get scammed.. but lets step back.. we have all gotten the Nigerian scams right.. we know nobody is going to send us 20 million dollars because they think we are nice and sent us an e mail  Correct ?

 with all of these folks off shore I would say 99.9% of them are Nigerian scammers. and they are targeting you  a beginner who knows no better.. but your rational and intelligent so you can see that this seems a little too easy right.... send a few e mails and they promise you a 2 million dollar loan at 2% you just need to buy this Bond in Thailand to secure the repayment its just 5k for the bond etc etc. 

So your on the right web site here.. there are many of us that have been in this business for many years 40 for me.. and I have owned a HML company in Oakland and lived and grew up on the Peninsula and lived in Napa valley prior to coming to Oregon. So Know the playing field pretty well.

Now money these days is competitive but here are were the rates really fall.

1. if you are getting a government backed loan you can get the 2.75% on your primary residence on a 15 year fully am... on commercial property you can get 4.5 to 6% from various lenders.. ( points are negotiable) and these are what I consider investor grade assets to experienced borrowers.

2. you have a relationship with a commercial bank in your city.. you can usually borrow from them at 1 and 5 to 6.5%  I currently get 1 and 6 for new construction loans and my fix and flipping.. little better if I want to buy a multi family..

3. you have crowd funders.. you have a great one in REalty shares which is located right down town in SF.. you could go in and eyeball them.. so they will have rates from 2 points and 8 to 9% up to 12 to 15% depending on risk reward. and they can fund in 30 days or less. But you must have good credit no BK and experience.

4. you have HML in the bay area they will be 1 and 9% generally.. generally they want 20% cash into any deal ... their credit and e3xpeince levels will vary.

But these are folks that are local to the area know the assets and can actually make loans. the more risky loans or less qualified borrowers will be in the 2 to 3 points and 12 to 14%.

5. Lendinghome is SF based and they have competitive rates but again if your just starting out your going to be on the high side of this.. I am closing a deal with them just now paying 2.5 points and 7.25% but I showed them I have flipped over 300 properties in the last 4 years and run millions through my accounts .. NO BK perfect creds.  ETC you can apply on line and they will quote you rate and term in 5 minutes and its real.

So anyone that is offering a too good to be true rate to someone who is brand new.. is a waste of your time... there are also a bunch of HML on this site that post a bunch and they will be right in the same ball park... but you can talk to them they won't charge up front. etc etc.

AS for trying to find an equity partner... that's like internet dating you have no clue who is at the other end of the e mail or phone.. and there are a lot of wanna bee's out there I get a call a week from someone trying to find money for someone.. those are also waste of time.

Go to the REIA events in the BAy Area meet some real people @?minh le is one and there are many others that can help you without bursting your bubble thinking you just landed a multi million dollar loan from an offshore company

Now or you can pay big bucks and join the club like the OP suggested and get the same advice I would caution you on paid training.. some is great but I would only do that with a proven one on one mentor and one that charges a large amount of money for that. Or stick with locals you meet at the REIA or BP meetups... paid training can be good but you need to be realistic about it... most of these types of deals are like MLM amway things only the few at the top make big dollars while you feed in your membership dues LOL.

hope this helps.  and if you want to share your Bizz plan or investment idea or project with me off line I would be happy to comment and then point you in the right direction.. thereby saving you some grief and time.. but you may not like what you hear  also  

Enjoy your day