Private lenders- what do I need to know?

[Dana Regan]

I am looking into private funding for my investment, and I have found interest rates by individuals as low as 5% interest only, to 9%.  Of course, the 5% looks great- what do I need to know? Is there any risk in working with an individual lender?

TIA

[Jay Hinrichs]

dana  there is NO private money at 5% from anyone who you have found on the internet or advertised for it.  @Chris Martin is exactly right.. private money on its face is Private.. they have no website they don't advertise.. private lenders are your dentist who has a few hundred grand in his self directed IRA and when your getting your teeth cleaned you start talking about real estate and what you could pay is much better.

Or Private folks you meet at meet ups... what you will find and there are a bunch of them trolling BP as well they are simply Due diligence pump and dump schemes.. offer you terms that are too good to be true.. and since your a beginner you have no clue.. and you gladly send them a little money up front because its sound reasonable.. and they just keep at you until you finally wake up and realize your not getting a loan at those rates and or a loan period that you have simply fallen for yet another scam artist. 

Due diligence schemes like these have been going on forever its not a new concept the new concept is how avaliable their dupes are to them now using social media IE linkedin Facebook  and BP

on another real estate investor website call connected investor.. they actually charge and they do due diligence before they allow you to post.. which they still won't get all the scammers out of the game but it will mitigate it.. 

I made one Post on BP for a loan and I got 6 hits.. ( in the pro section)  2 were folks that I know were real as they have been reading me over the years.. and or had some interaction with me. and 4 were clearly fakes and scammers.. One just wanted to refer me to a lady in FLA who said she was in GA name of company came up in Boston.. called that guy and he is very UPSET they stole his name.. but of course for 500. up front they have a list of a thousand private investors in their data base and will be just a matter of days and they will hook you up.. I was looking for a construction loan in Chareleston SC and those are hard to get.. so I know it was BS.. it was total BS..   LOL.. 

Anyway if you read this whole reply I hope you will understand that beginners or even veterans cannot borrow money like this. unless its on a rental that you fully qualify for with the modern guidelines. If your looking for fix and flip financing or short term. then this is absolutely a scam.  money for short term is 9 to 15% with 2 to 5 points plus fees.. thats what money costs..