Will hard money lenders or angel investor ask for fees up front?

[Christie Mroz]

Needing some help.  I have come across a few lenders, both hard money and angel investors, that are willing to invest in my "project".  I've been asked by all of them, so far, for 1-2% of the total loan up front.   Since it's a high dollar amount I am asking for the fees range from $5,000 - $14,000, to be paid, up front, my account to theirs.  Having a hard time with it.  I've dug deep enough on a few of them to figure out it was a scam, but the few left .. I can verify a LOT of details, but I am still having a hard time with it.  I'm new in the business, so I hate to learn the hard way on such a high dollar amount. 

 ANY help on this would be HUGELY helpful.

THANK YOU SO MUCH

[Jeff S.]

Up-front fees are the biggest red flag in lending. There is absolutely no reason a legitimate lender can’t settle everything thru title when your deal closes, @Christie Mroz.

The only exception might be for a credit check, which maybe costs $35, and for an appraisal. If you must pay for an appraisal, this should go directly to the appraiser, not to the lender. Not all private/hard money lenders require these.

Some lenders additionally expect you to pay an application fee. This is an extremely competitive business. You should easily be able to find lenders who don’t but if you can’t, these should be very nominal. Large commercial projects, which yours is probably not, will be different.

Stay off the web when looking for money, Christie, if that’s what you are doing. Lending is a business based on relationships. There are just too many scammers out there and it’s very hard to tell who is whom or even whose website is legit, as it looks like you figured out. Real estate clubs, when they open up again, are your best bet for finding money.