I get connection requests on a daily basis from lenders offering great rates of only 3, 4, 5% for loans. Wow! I see the same type of posts in a lot of the LinkedIn groups that I follow. Since many of the groups that I follow are Real Estate Investment groups, I’m sure that the members are enticed by such attractive, low rates. Especially when you consider the costs of hard money for real estate rehab projects.
I’m reminded of the old adage: “If it sounds too good to be true, it probably is”.
I guess people have gotten too used to the scams coming from the Nigerian Prince who has $100M in an account for them and they just need to send a check for $20,000 to get it. The scammers have to try something new. These “easy” loan offers look like a sophisticated and subtle way to scam people out of money and their personal information. There are plenty of legitimate lenders and loan brokers out there. You just need to be careful to separate the good from the bad.
Here are some things to watch out for:
- Profile – The profiles tell me a story. Real people have a history, interests, recommendations. The scammers leave a lot of telltales in their profiles that let me know to be careful.
- Does the person only have a couple of connections?
- Does the account look like it was just created yesterday?
- Is the profile missing job history?
- Are the connections realistic or do they just look like he/she connected with everyone you know?
- Poor grammar or misspelling of words.
- Attractive profile picture – Anybody can upload a photo.
- Request for personal information – This is why a loan offer is especially sinister. A loan application asks for a lot of personal and financial information. Unless you are absolutely sure that the person/entity is for real, don’t give identity thieves the information they need. Deal with people you know and that are in your personal circles.
- Payment in advance – Legitimate lenders do not ask for a fee in advance. By the time a lender/broker takes the application, they should have reviewed your information and have a reasonable degree of confidence that the loan will be approved. Of course some will fall through, but that is just a cost of doing business.
This list is not meant to be exhaustive. There are always a lot of subtle cues that should let you know that someone is for real or not. The best recommendation is still to follow the old adage: if it sounds too good to be true, it probably is.