Everything we do in my business, everything we teach, revolves around the fact that you can get into small apartments and multi-family real estate investments through private money (or Other People’s Money) without using any cash or credit of your own.
Over the years, I have answered hundreds and hundreds of questions about private money, but the one answer you absolutely need to know to protect yourself and your family is this:
You do not, should not and cannot afford to pay up front for private money hunters.
Unfortunately, for some real estate entrepreneurs, they have had to learn this the hard way.
Here’s how these scam artists and crooks work:
- They set up some private money loan website.
- These unscrupulous conmen get you to sign a contract to get money from different lenders.
- Once you’ve signed, they ask you to pay for legal fees to get money released through foreign countries, also known as “international transfer platform fees,” etc.
As for mindset, I can tell you after spending thousands of dollars without seeing a dime, these guys will demoralize you from attaining the real estate business that was already within reach.
I know someone who believed she was getting private money from an investor in Pennsylvania, only to be taken for a ride by scammers in Nigeria. She lost $3,000 and was absolutely devastated when they pressured her to pay their legal fees—or risk being charged more for backing out.
In my No. 1 best-selling book, “How to Make Big Money in Small Apartments,” I teach you the right way to get private money using a proven system I developed and put into action in my own business.
There are some very good private money hunters out there, however, but you have to do your due diligence in checking out these professionals. And remember, you do not pay any cash up front.
Here’s what to look for in the real deal:
- A U.S.-based office with a physical address
- Registered securities agent with the U.S. Securities and Exchange Commission (SEC)
- Availability of references from successful clients you can call
- You only pay money at closing, not up front, and only if they are accredited investors.
Finally, if you have been taken on a wild ride only to end up with empty pockets, you can change the dynamic of the situation by threatening to report them to the Better Business Bureau and your state attorney general’s office if they do not refund the fees you paid.
Begin by asking the hunter, “What is your address?”
Then, ask them, “Are you registered as a securities agent with the SEC?”
Inform them that you are aware of the laws: a license is required if the finder is matchmaking money from any person who is not an accredited investor.
If you do not get your money back, report them to the BBB and the AG’s office as instructed above.
But, once again, never ever give money up-front to a person who says they will connect you with private money. It just doesn’t work that way.