Is it common for a lender to say “bring me your deals”, you show it to them, they say NO and then they secretly go and buy them and cut everyone out?
Yes, anyone can try to purchase a property out from under you, legitimate hard money lenders are in the business to earn interest and finance, and would like to keep you coming back to borrow. They do not have the time to renovate and sell. As a bank or anyone would they are going to ask for project economics and proof of down payment before they fund.
Yes it always potential problem, so deal with people you know. On other if you are using a lender to evaluate your project and if they are willing to make you a loan you are more confident that project has potential. If that is what you are doing, DON’T! You should be 110% convinced that deal is excellent, have it under contract and then go to a lender. If the project is good, “MONEY WILL FIND IT”.
Good luck,
George Krajacic
Hi,
I have never had a lender look to steal my deal, with that said I only deal with reputable lenders with good local references.
They are in the business of lending and reputation is important to lenders working money for interest returns, they don’t have time to try and flip property and it is outside of their area of expertise.
Stay away from shady lenders who want money upfront and can’t provide legitimate references!
GR
Although the Bible teaches, ‘thou shall not steal,’ I have 1st hand experience that the answer to your question is yes. There are ways to prevent this by having an agreement with seller prior to presenting to a lender for financing. Also, you can have lender sign (if they agree to) a non disclosure agreement prior to submitting your loan application.
Having said that, if a deal is stolen and you have documentation of your activity from the beginning between all parties (in the words, all correspondence between all parties in writing), and after that, if a deal is stolen, one could publish into the public record an affidavit of truth of the chronology of the deal with all memorialized documentation attached, give a deadline for the parties to respond with their own affidavit refuting your testimony and requiring they sign under penalty of perjury, with full and unlimited liability, refuted each and every averment made in your affidavit, then certifying their non responses (they will NEVER respond sufficiently because if your affidavit is telling the truth, they cannot refute without committing perjury!).
Then, counterclaim them including compensatory and punitive damages using all their corporate and personal assets as surety for the claim, including their E & O Insurance. Their insurance will be forced to settle with you and if the limits are insufficient, one could liquidate the parties and their corporations.
You will likely find this process equal or greater profits than if you purchased the property. This has worked well for me.
Hope this helps.
Rob