Anyone buy any deals through Networth Realty using the 212 loans?

Question

I just met with them and would like to know if anyone has any experience in working with them. They will only allow you to use 212 as a hard money lender and their rates are pretty high. 13.99% and 3.5% origination. I would love to hear is anyone has any experience with them good or bad. Thank you

Aaron Gaffney · Answer

They have a branch here in PHX- very upstanding guys and they don't require you to use HML they're affiliated with (212) though they do offer it. We have cheaper money around here. But some of my colleagues are in the midst of a flip they bought from them and it's going very well. NetWorth does a really good job with estimates, comps package etc which is somewhat unusual for a wholesale company. I have only positive things to share about them!

Chris Martin · Answer

I have not. I can tell you that after a quick search, they (Networth Realty of Charlotte, LLC) is a registered broker with the NC Real Estate commission, and their company is registered as a foreign LLC (from Texas) with the NC secretary of state. The way to tell if they have done any lending in your county, besides asking them for references, is to look their company name up in your county's recorded documents. If you can't find them listed, that doesn't mean they aren't legit. But if there are recorded documents, you can read through them and get an idea of what kind of lending they do...

Kyle Blake · Answer

I've worked with them here and have routinely found their numbers inflated and they bank on bidding wars among investors to increase their profits, while you will be hard pressed to make any. Their loan service is required if you want access to their prime deals, but given what I've seen, those prime deals would have the better profits eaten by the higher loan terms.

Christopher K. · Answer

Honestly, I've never heard of them or had any dealings with them. Those rates and fees, while a bit on the high side, aren't as concerning to me. The part that sets off my red flag of caution is the you must use our hard money lender if you buy our deal requirement. (Assuming I understood your post correctly) The less autonomy and decision making authority I have over a prospective deal, the less comfortable I am with it. I'm not saying it's impossible that the deal might be legit and that their business model just happens to be that they make money from as many sides of the transaction as possible...but for me, I'd have to have more information on them and understand (and believe) the real why behind their business model. Because it's not typical and sounds a bit messy, in my opinion. Assuming that they're both owned or being controlled by the same person or group of people, they are definitely making money on the lending side of it. But the forced business arrangement makes it seem like there's a decent chance they're not making that much on the part of the business that's wholesaling you the deal. If they were, why not just offer both services but not force people to use both..I could def be wrong but my best GUESS with the limited info I have is that their deals (properties themselves) probably aren't that much of a deal and they're making their real money on the 3.5 points, with the knowledge that they know they're probably going to end up taking the property back, and then turning over 3.5 points several more times on the same property. The probability of default on a HML is already somewhat/relatively high, but you throw in the fact that this forced business arrangement is going to likely turn off most experienced investors, and you are drastically increasing the likelihood of default. They either have to know this (in which case, again, you'd want to figure out what their real angle is here) or else they're blind to the reality of what they're trying to do and they've setup a house of cards that won't be around for very long. ..or again, MAYBE they've got real deals and they've just figured out a way to maximize their profit on the whole transaction. To be honest, I'm not entirely sure a property seller can "require" you to use their back pocket lender. Certainly seems like there's likely some lending or anti trust rules being violated here but I can't say for certain. In case you can't tell, something definitely seems a little off to me. Just my opinion. By chance, did they happen to charge you anything so far up front to present you with this golden opportunity? Or are you aware of any other charges? (Like, they also hold your hand through the deal for a 'mentoring' fee or something similar?) If the answer is yes to any of this, I'd almost definitely run before you sink any more money into this. If they're making money on coaching, mentoring, lending, etc. - there's a very high chance the deal (property) itself wouldn't stand on its own, or be very profitable in and of itself. In these situations the "deal" (or dream of making lots of money investing in a property) is a front or mask for the real way they're making money off of you.