Short answer:
Not all private lenders are trustworthy, transparent, or equipped to support real estate investors. Spotting red flags early can save you from hidden fees, funding delays, or even deal failure.
Here’s what to look out for when choosing a hard money lender in Texas—especially if you’re working on time-sensitive projects in Dallas, Tarrant, or Collin counties.
Some private lenders advertise low rates—but once you're deep in the process, you discover:
Red Flag:
You can’t get a straight answer on what the loan will cost, or the fee structure changes halfway through underwriting.
What to do instead:
Ask for a written term sheet that outlines all origination fees, processing charges, extension fees, and exit costs—before you commit.
At Silverton Capital, our pricing is upfront and simple. What you see in your term sheet is what you close with.
Time kills deals—especially in hot markets like North Texas. If a lender takes days to respond during the application phase, it’s unlikely they’ll move quickly when it’s time to fund.
Red Flag:
You’re constantly chasing the lender for updates. Emails go unanswered. Voicemails sit unreturned.
What to do instead:
Look for a lender who communicates like a partner. Ask how long it typically takes to get:
Speed and transparency matter—especially when you're competing with cash buyers.
Texas real estate isn’t like California, New York, or Florida. Local laws, permit processes, and neighborhood comps vary drastically—even across DFW suburbs.
Red Flag:
The lender doesn’t know the difference between city and county approvals—or worse, confuses McKinney with McAllen.
What to do instead:
Choose a lender who lives and lends in Texas. At Silverton Capital, we specialize in Dallas, Tarrant, and Collin counties—because that’s where we’re based, and we understand the pace, the people, and the permitting process.
If you’re rehabbing or building, you'll likely receive funds in draws based on project milestones. A bad draw process can delay contractors, slow your timeline, or starve your job site of cash.
Red Flag:
The lender doesn’t explain how the draw schedule works—or they require long inspections with slow turnaround.
What to do instead:
Ask:
At Silverton Capital, we offer a straightforward draw process designed around real-world rehab timelines—so you can keep moving.
Private lending is all about short-term solutions. If a lender doesn’t ask about your exit strategy, that’s a problem.
Red Flag:
They’re only focused on the property—but not how or when you’ll repay the loan.
What to do instead:
Be ready to explain:
Your lender should help align the loan term with your exit plan, not leave it to chance.
Legitimate lenders don’t collect large sums upfront before giving you terms. A small application or credit check fee is standard—but beware of anything more than a few hundred dollars.
Red Flag:
The lender wants a wire transfer or cashier’s check before sharing loan terms.
What to do instead:
Work with lenders who approve first, fund later. If you’re unsure, walk away.
Reputable lenders will be able to:
Red Flag:
All you get is sales hype, testimonials without names, or unclear terms.
What to do instead:
Ask: “Have you funded a project like mine in the last 60 days?” That question separates professionals from pretenders.
Choosing the wrong private lender can derail your project—or worse, cost you the deal. But the right lender? They help you close quickly, keep your project funded, and support your exit strategy from day one.
That’s what we do at Silverton Capital. We’re Texas-based, investor-friendly, and focused on getting your deal over the finish line.
Need a hard money lender you can trust?
Apply with Silverton Capital for fast, transparent lending in Dallas, Tarrant, and Collin counties.
This article is for informational purposes only and is not intended to serve as legal, financial, or investment advice. Please consult with a licensed professional before making financial decisions.