In the fast pace world of commercial real estate and investment properties, a commercial bridge loans can be just the type of funding you need to keep your investment plan running smoothly and many loan scammers are aware of that fact. So, in order to avoid being scammed let’s go over a few red flags.
If this is your first time applying for a commercial bridge loan, you may be surprised to know that you are actually not alone. Up until recently, many people simply did not use bridge loans due to the fact credit was once upon a time much easier to get. But, unfortunately, we no longer live in a world where that is the case i.e. it is much harder to obtain financing and even harder to maintain good credit.
Since bridge loans were somewhat of a foreign concept until recently, many people simply do not understand how they work, which means many do not know when they are actually getting scammed. Clearly, this is one of the main reasons to do your homework when it comes to applying for a commercial bridge loan. If you are like most businesses, much of your financial future depends on not being a party to a loan scam.
Typically, with a commercial bridge loans, the most common pitfalls and scams are the bait-and-switch loan scam, the upfront fee loan scam and of course the old-fashion identify theft loan scam. Out of all three of these particular loan scams, the one you time and time again is actually the upfront fee scam since actual lenders generally charge an upfront fee. So, you may be asking yourself, if actual lenders charge upfront fees how will you know if you are being scammed or not? Well, the answer, of course, lies in the details—the actual details i.e. pay attention to email addresses being spelled correctly and lender addresses.
With the bait-and-switch loan scam, you concern is not whether you are dealing with an actual lender or not. In fact, your main concern in this particular scenario is whether or not you are being secretly taken advantage of by a legitimate lender. Sadly, many actual or legitimate lenders choose not to play by rules. Therefore, it is extremely important you pay attention to the terms and conditions throughout the entire process including up until closing. Moreover, if it is a new lender you are working with or even a lender that you know other people have worked with in the past, then check their references ideally before working with them or at least before it is too late.
Lastly, it is important to go into your lender-borrower situation with your eyes open. Identity-theft loan scams generally occur because people simply do not listen to their instincts. In other words, if loan terms seem too good to be true or you receive a lender offer too easily or too quickly, there should be cause for concern. Moreover, if your lender is not based in the United States or is requesting sensitive documentation you should definitely slow your roll in order to not become a victim of loan scamming.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.