To Catch a Real Estate Investment Lending Predator

I have been working to educate investors on the prevalence of scams in the hard money world.  Because examples are often the best method, I went down the rabbit hole so that you do not have to.  So here is a transcript of my conversation with someone who professed to be a lender, but based on the conservation was anything but.

To provide a start point, I have included the teaser that they threw out in a Facebook Fix-and-Flip group. For the sharing of this uncensored transcript, I will refer to ME for my input to the conversation and SCAMMER for theirs.  When appropriate, I have added commentary to identify the red flags.  The only change is that I have redacted the name of the person that the scammer was impersonating as I do not want an innocent person impacted.  As an aside, I also let him know so he could deal with Facebook.

BEGIN CONVERSATION

SCAMMER (In a post)

I’m offering 100% Financing on Fix & Flip/Rehab, Buy & Hold Properties e.t.c at 6% interest rate. DM or Drop your email for info.

  • NOTE: this came with a now removed text graphic spouting the same unattainable terms.  6% is below most residential products so he would be losing money on this program, but this is a tried and true method in finding marks.
SCAMMER
Okay Great! I offer the best loan offer for the best property and rehab cost loan 
So, it should be super obvious that this was a scam, but I say that from the perspective of a lender.  A legit lender who is consistently appalled that these crooks operate with impunity.  The original post was identical and verbatim to literally hundreds that I have seen and the only reason for this is because it must work.  It must be a successful tactic in scamming current and prospective investors out of their hard earned money which is beyond reprehensible.  The good news is that it is avoidable.  This is why our post today is uncensored and accurate as to these techniques.
Whether you are an investor looking for capital or a professional referring lenders to clients, friends or family, you can be the shield wall that ruins a scammers day.  You can and should play a part in avoiding getting scammed, but also in helping others avoid it. My best advice, find a good reputable lender and use them.  Remember, the hard money world is minimally regulated and lacks any licensing requirements.  Going with a reputable lender or one with whom you have an affinity connection can overcome the Don’t allow unsavory “lenders” to rob you or those whose success that you value.
Here are some other resources to help you make the right lender choice.