How to Verify if Hard money is legit

Question

Hi every one, im a  new member on BP but old member of real estate , developing.

We are real estate developing construction company located in Rockland County Ny, looking in right now to get hard money for soft cost for a upcoming development, we got across a hard money lender on instegrem and Linkdin and i would like to know if they are legit, the company name is

Flatiron Realty Capital and name of contact is Oscar Castro as Sales Manager

Question  dose anyone have any info or know this company. And second is there a way to verify a hard money lender legitimacy before submitting any privet info. I know there is a list of hard money lenders on B P  but this company is not listed. Thank you so much Bigger Pockets

Kyle J. · Answer

@Jay Samet  I've never heard of this company, but I can tell you there's a few red flags with them.

#1 - Just looking at their website, they spelled Residential wrong:

#2 - When you search for their company name on the NMLS website (http://www.nmlsconsumeraccess.org/) to verify whether they're licensed, you get "No matches found!"

#3 - Lastly, on their website under "Recently Closed Loans", they list a variety of deals in a number of cities.  @Wayne Brooks provided you with an excellent way to verify if a hard money lender is legit, though few people actually do it.  Simply search their name in county records.  If they're lending money, they'll be a record of it.  I picked one of the deals they had listed (Jersey City, NJ) and searched Hudson County online records.  Guess what?  "No Results Found!"  Just to be sure, I conducted a Google search to get the names of other hard money lenders in Hudson County and searched them in Hudson County online records and found plenty of results for them.  Just none for the company you're inquiring about.

So are they a legit lender or not?  I don't know.  Like I said, I've never heard of them.  But my quick research has raised enough red flags that I know I wouldn't send them any of my private information.

Mindy Jensen · Answer

Hi @Jay Samet . The list on BiggerPockets is not an all-encompassing list, so not being listed there isn't a red flag.

However, there are some red flags to keep an eye out for. Loans cost money, but there aren't any loan insurance fees, or upfront fees to get you started. There ARE fees, but anyone asking for money to get started isn't someone you're likely to hear from again, after you hand over the funds. Even if they're minimal.

Be wary of people who can lend "from $20,000 to $20 million." Think about it, if they can handle a $20 million loan, why are they bothering with the $20,000 loan?

There is a list of red flags to watch out for at www.biggerpockets.com/scam

Tom S. · Answer

@Daniel Wong  Really??  I swung by their location the other day and couldn't find that business there.

Don Konipol · Answer

Yeah, I'm super impressed by a principal of a company chiming in 9 months after a post to say that the posters are wrong, his company is great.  Also most impressive and professional is clicking on the principals name and seeing a picture of two guys with one in a wife beater shirt.  Not to mention the principal referring to his company in the third person (they instead of we).

But then again the D rating by the Better Business Bureau should really impress

Chris Lemire · Answer

@Jay Samet I'd probably just get a referral from another investor in your area. If there is someone you trust in your market who is working at some degree of scale, they are likely to have used hard money at some point and can point you towards a company they know performs.

We've worked with a few different hard money lenders in the past, and their quality varies wildly, so getting a warm referral goes a long way towards building confidence for all parties involved.

Another good referral source are the established wholesalers in your market. If there's a hard money lender they won't accept when a buyer submits an offer, that's a huge red flag to me.

Jay Hinrichs · Answer

@Kyle J.  good research.. there are 12 states I believe were you need NMLS registration and state license to do loans on 1 to 4 units.. developer loans and 5 units and up in most markets require no licenses.  So it depends on what the loan is about.

Lots of fake lenders out there though.. biggest red flag to me is.

Like @Mindy Jensen said a lender that says they do loans from 20k to 100 mil.. that just does not happen ..

and or they say they have 4% money  that is not happening either..

so I think the OP is sold on these guys based on last response.. Just want to be careful about sending any money up front.  and if they are located in the market can always call for an appointment..

Wayne Brooks · Answer

Other than fantasy terms and upfront fees, you can look up their name in the county records where mtgs are recorded.....search their name, see how many, if any, mtg.s they have recorded.

You of course can better terms from traditional lenders assuming the proper experience, capital and project specifics of course.

Ryan Shimiaie · Answer

Flatiron Realty Capital is a lender that has been active for 2+ Years. They have closed 600+ transactions. They are funded by a family that owns 32 residential and mixed use buildings in Manhattan. 60 Madison Avenue and 150 Great Neck Road are their offices. They are a legitimate private lender originating 40+ transactions a month at this point.

Please verify your sources?

How to Verify if Hard money is legit

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