Lee Arnold's Private Money Brokering

[Tonie Jo Andrews]

Hi there! I'm really wanting to get started in real estate investing, but finances are tight (I'm sure that sounds very familiar to all of you!).

I was intrigued by a program Lee Arnold has, which is essentially becoming a private money lending broker (if that's the best way to describe it). The program is fairlycheap compared to others I've seen...but it is still money I don't want to waste, if it isn't effective, legit, or good.

Does anybody know anything about this program, and if being a private money broker is a legitimate and good way to make money?

[Jeff S.]

I have to hand it to Lee Arnold. He charges a lot of money for what all other lenders offer for free.

Understand, @Tonie Jo Andrews, that “Broker” is a legal term. Mortgage brokers make or arrange loans to the public and are required to be licensed in every state I’m aware of. They are fiduciaries, which means they must act in the best interest of the parties they represent. They are also heavily regulated. A broker can legally receive a commission for the loans they originate.

Becoming a licensed broker is generally a lot of work and can require months or years of classes, apprentice training, and a test provided by the state in order to obtain the license. Lee Andrews provides a printed certificate from his company which holds absolutely no legal weight nor authority. It’s worth the paper it’s printed on. That is, being a broker licensed in your state to originate loans is much different than that of a “broker” certified by Lee Andrews.

What Lee Andrews is offering is what all other lenders call an affiliate program. Here, you are really just a salesperson representing his company, with knowledge of his terms and other lending criteria that he somehow convinced you to pay for. Why would you do this?

Many hard money lenders will be happy to educate you about their program for free so you can refer borrowers to them. Go to the website of some large hard money lenders and you will often find a link that says “Affiliate Program.” Ask what info you need to learn their processes and what finder’s fee they will pay for deals that close. You don’t pay to become an affiliate. On the contrary. Many of those on this board who call themselves lenders are really affiliates.

So long as it’s legal in your state, there is nothing wrong with being an affiliate and receiving a finder’s fee. You just can’t use it to misrepresent yourself as a broker.