Due Diligence On Private Lender

[Edwin Farmer]

Hello . . . I am new to working with private lenders.  I do have experience in property financing, both my own homes and investment properties.  But, all of my previous experience has been with conventional lenders.

I have reached out to a private lender to finance a flip in Southern New Jersey. The deal looks very good, he is interested in financing and the terms look good. $125,000 for one year, interest only payments at 6% with 2% PMI.

The problem is that we are doing this deal remotely, I am in NJ and he is in NV. He wants (needs?) the PMI, $2500, transferred before dispersing the funds.

How can I be certain that he is legit?

[Brandon Shewbridge]

So you wire $2500 and he finds some reason not to fund.  Do you think youll see that $2500 again?  If he is legit, then he shouldnt need anything from you up front (maybe a small $100 application fee at most)

Use an escrow service.   You put in the $2500 and he gets it when the deal funds as verified by your closing attorney.