Unfortunately, there are scammers in the world in which we live. Know the top scams that have invaded the commercial lending industry in order to keep you and your finances safe.

With the tightening of traditional commercial lending institutions and their diminished lending practices, many individuals are turning to commercial bridge loans to finance their new home while their old home sells, or for investment purposes. These types of loans are commonly used in commercial lending circles so that property can be purchased and renovated all the while making interest-only payments and paying off the balance at the time of sale. Unfortunately, with the increasing use of these types of loans, individuals with less than professional credentials and basic scammers have gotten into this sector, offering invalid loans as a way of making some quick cash. Here are a few of the scams to be aware of.

The upfront-fee scam is the most common type of scam. Unfortunately, many lenders do require an upfront fee for commercial bridge loans, making this scam particularly deceptive. Do due diligence before getting involved with a lender. Ask for references. Check for reviews. Talk with people in the industry. Red flags include wire-transfer fees, payment to be sent overseas, transaction insurance fees and fees that are out-of-line with other commercial bridge loan lenders. Check that they have a valid website and the right credentials. Always remember the old adage: If something seems too good to be true, it probably is.

The bait-and-switch scam actually involves commercial lenders who do not have your best interest at heart and are trying to get additional money from you (think used car salesman at a disreputable dealer). This scam does not take place until closing, so be sure to, once again, make sure your lender has good references and is well-known in their community. If your lender offers you a low interest rate and then, at closing, increases the rate or asks for more equity—put the pen, or mouse, down and head for the door.

Identity Theft

Others pretend to be in the loan business as a front for identity theft. Again, dealing with a reputable lender will keep you in the clear. Do not give out any of your personal information such as social security, bank information or date of birth until you are certain you are dealing with an honest lender. A red flag: They do not obtain information on the asset you are using for collateral.

Always ask for references. A respected and qualified loan provider will not hesitate to provide you with the information you need to feel confident before signing on the dotted line.

At Level 4 Funding we don’t just process loans, we develop relationships. Working with a lender on multiple projects leads to a seamless flow—one project begins as another one ends. The bottom line is that your success is our success. We offer short-term 3 to 12 month bridge loans that are perfect for investors as well as home buyers who have not sold their first home before purchasing their second. It can bridge the gap while waiting for a traditional loan to come through or provide the funds you need for a down payment and begin the renovation process. Businesses use it for purchasing equipment and cash flow stabilization. Call us for a quick no-obligation quote and to see if this is the right loan for you.

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

Dennis Dahlberg Broker/RI/CEO
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.

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