I get emails from people claiming to be Private Lenders

[Jon Collins]

Hi, from time to time I get emails from people who claim to be Private Lenders.  Has anyone else gotten these?  They ask if I have any properties I'm looking for finance.  How would I determine if its a scam or real.  How would I vet these people?

[Ryan Herting]

Hey @Jon Collins, 

Here is a list of 20 questions you should be asking to vet a lender. 

1. Any upfront fees (There shouldn't be anything other than an application and appraisal) 

2.Do you have a minimum loan amount? (Example answer -For 30-year rental loans, 100K min. For short-term bridge loans, 75K min.

3.Do you have a minimum FICO score? (Example answer-Depends on experience level, typically the lender will want to see above 640 

4. Am I required to have "skin in the game?" (Example answer - don't do 100% financing. Max LTC is typically 85% and LTV is 75% max

5. Do you withhold inspection fees? (Example answer The fee for the draw inspection fee is $250, which is paid directly to the inspector)

6.Do you lend on rentals? (Example answer Yes, we do have 30-year rental loans)

7.Do you use a house appraisal or a licensed appraiser? (Example answer -The appraisers need to be licensed, but we do accept appraiser recommendations)

8. Do you dictate the standards of repairs I have to make? ( Example answer- No, numbers just need to make sense)

9.Are there any specific geographic areas that you don’t lend in? (Example answer - No CA, NY, NV,  and no rural areas)

10. Do I need cash reserves? (Example answer -Yes, that amount will vary depending on the loan you’re doing)

11. What are your interest rates? (Example answer -Depends on the loan program, property type, loan amount, and your FICO)

12. How many points do you charge? (Example answer Typically 2%)

13. What is the loan to value you lend at? (Example answer Max 75% LTV

14. Is your LTV based on the purchase price or ARV? (Example answer - max 85% LTC on rehab loans or 70% of the LTARV (lesser of the two)

15.Do you lend on repairs? (Example - Yes)

16. How quickly can you close? (example answer Within 3-4 weeks, 5-14 days)

17. Does your company charge any additional fees? (Example - Legal fee of $1,850 and $200 application fee)

18. What is required in order to receive your best interest rates? (Example - Over 9 deals experience in the last 3 years or 780+ FICO)

19.Do you require monthly interest payments? ( Example answer- Depends on the loan program)

20.Do you have ROI expectations? (Example answer - ROI expectations will vary based on exit strategy and loan amount)

All around I would also try to get a feel if that lender would have a vested interest in your goals, or if you aren't sure of your goals, they should be helping you on laying that groundwork to help you scale.

Hope that was helpful!