The 100% hard money financing scam.
There are a lot of scammers on the internet, and this should come as no surprise to anyone. While some of the crazy ones will promise things like millions of dollars for unsecured loans. The most common one that I see is the 100% hard money financing scam. Hard money loan scams seem to find my inbox on a daily basis. The bad news is that some house flippers have to fall for these false promises or the scam emails would dry up.
Now for those of you questioning my ability to spot a scam on the surface, let me ask you a question. Would you lend anyone all of the money for a house flipping deal, knowing that there is a risk involved in this project. Follow that up with how many risks have to go bad before you loose 100% of your money? Would you make that loan? But wait, there is more. This magic lender is claiming that they have so much faith in the borrower that they don’t need the borrower to have ANY risk in this deal. Only an idiot would greenlight that hard money loan.
The bad news is that these guys are not idiots. They are scammers. They know full well that they are going to extract money out of their borrowers. They know that they will not be providing 100% financing for your fix and flip deal. That narrative falls apart in two directions.
The first part is the appraisal. The appraisal will undoubtedly come in low. This is where the deal falls apart. So now, you don’t have 300k in funding available, you have 265k and you need to come up with 35k to keep this deal alive. That would be more than the 0% you were told about. This happens because the supposed lenders, are forced to be super conservative in their appraisals. This is their safety catch and the reason that you won’t see 100% financing.
The other foot falls when they spring the FEE structure on you. Buckle up folks, you are in for a bump ride. The creativity that goes into the avalanche of fees is breathtaking. I have seen 30k tacked on in fees, that I honestly can’t tell you what the fee represented. It looks like a laundry list of made-up terms with prices next to them. The truth is that they are going to extract money from you. The problem is that they used scam terms to bait you in and by the time you see the full picture, it is almost too late to fund another lender. I happen to be another lender, and I can get you out of this disaster.
The rule of thumb is that if a hard money loan sounds too good to be true, it is. When you evaluate a hard money loan offer, ask this simple question. Is there any way on Earth that these guys can stay in business if they make the loans that they advertise?
If you find yourself waking up from the illusion of 100% funding, you need to reach out to me asap to save your deal and your wallet. I can get you real hard money funding for your fix and flip deal, and I can fund in as little as 48 hours if you get me all the documentation for your deal.
Feel free to email me before you have a deal and I will lay out the loan requirements for you BEFORE you get too deep.