Private lending WARNING #1


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I am Michael Bonn, the owner of The Note Shop. For over 23 years, I have been involved in non-traditional and private real estate lending in Colorado and several U.S. states.

My company has been fortunate enough to oversee and close hundreds of millions of dollars in secured real estate notes.

In my experience, I can tell you there’s no better win-win strategy to earn an above market interest rate. Why? Because you’re putting your money to work right in your backyard with local individuals. That means you’re creating jobs where you live.

On top of that, borrowers get easy access to money to keep their portfolio growing, and you’ll find interest rates above those offered by banks, annuities, and bonds. This works great for all funds you are looking to grow without the roller coaster of the stock market. These funds might include:

  • Savings Accounts
  • Retirement Accounts
  • Trust Accounts
  • Business Accounts

If done correctly, secured private lending on real estate is a great option in all economic environments.

So, with 20 plus years of experience, I have learned what to do and—more importantly—what not to do when lending directly to a borrower.

That’s why I wrote this booklet. It’s intended to show you how to protect yourself and your money by keeping an eye out for scams and other warnings that lead to robbery and headaches.

Of course, there’s no way to list every possible scam or warning in the private lending industry. But these top ten cover the majority of issues you’re most likely to stumble upon during your private lending journey.

Now, be aware, I’m not a lawyer. Therefore, I’d never give or intend to give legal advice. But given the large amount of money you’re looking to lend, I feel it’s vital you understand the possible pitfalls, do your due diligence you, and engage knowledgeable people who can help. That includes a good attorney and title company.

So, without further ado, let’s take a look at



  1. Hijacking a Wire


Why do we see all of these warnings from the local and national title companies and closing agents?


We see these warnings because money is vanishing right before everyone’s eyes. In a flash, hundreds of thousands of dollars are gone!

Every day, money disappears and heads overseas before anyone can do a thing about it. (Yes, the government could control this, but they have chosen not to.) This tragedy happens when both sending money for a new loan and receiving money for a payoff.

What does fraud look like, and how can these thieves grab people’s money and run?

In real estate transactions, the escrow agent, title company, or attorney receive your money and then pay you off later, once the loan is complete. So, money travels back and forth between your account and one of these entities.

During this time, you and an agent will share bank and wire instructions.

This is where a thief likes to get involved.

They’ll find a way to hack into a communication system and add information that looks like it’s coming from someone involved, be it the closing agent, realtor, borrower, etc. Their goal is to convince you that the wire instructions changed.

With this change, the thief asks you to wire the funds to a different account. They usually also ask you to wire funds sooner than agreed upon. Why? Because they need the extra time to make sure the money is moved through the banking system before closing…and before you can get it back.

All of this might happen to you via email, text, or a phone call.

Thieves are tricky. They will find a way to break into a stream of email or text communication and make it look like the communication is coming from the same source.

What can you do?

Get on the phone and verify wire instructions.

It doesn’t matter if the instructions were sent through a super high-level security system (ex: encrypted email). A hacker can find a way around those. You shouldn’t even trust the phone numbers listed on a closing agent’s email. Take a few minutes to go online and look your agent’s phone number up. Make sure they match.

It all comes down to doing your due diligence. With every wire, call and verbally verify with the correctagent the instructions you’re supposed to use. Walk through each item and verify:

  1. Bank name
  2. Account name
  3. Account number
  4. ABA or routing number
  5. The agent’s file name or number

NEVER accept last minute changes to wire instructions.

ALWAYS verify instructions before you send or receive a wire.

When you receive a wire, demand that the person sending you money verbally verifies the information with you and only you.

This alone can save you and your life savings.

Let’s take a look at some real-life examples.

Note: Do not solely rely on these examples as the only way thieves will try to steal your money. Although I’ll attempt to give you as many examples as possible throughout this booklet, I cannot possibly know them all. So, always get to know who is handling your transactions and ask them the best practices to keep your money safe.

The following happened to two lenders I know personally. One of them lost a couple hundred thousand dollars, and the other saved his funds at the last minute.

Let’s call the first lender Bob.

Bob had an arrangement with his bank to simply wire funds when they received a fax from him.  Somehow a thief broke into Bob’s system and found his form for faxing wire requests. The thief created their own request and had funds wired to them out of the country before Bob could find out.

The bank was not responsible. Bob was.

So, he lost it all.

Now, let’s call the second lender Joe.

Joe had someone hack into his email, clone a message, and change the wire instructions. What do I mean by “cloning”? Well, let’s say Joe’s email was The thief went in and created a similar email address that most people would not notice, like By adding one letter (s) at the end of the address, the thief changed the email. Again, most people would not notice the change and thieves can quietly sneak by.

That’s what happened to Joe. Someone changed the wire instructions by creating a similar email address. The wire was readied to go out, but—thankfully—someone noticed the name on the account looked wrong. So, they did a verbal verification as a safety precaution.

Joe’s money was saved.

Here’s another example I recently read about:

A property in Colorado did not close because the money to purchase was diverted by a text message. The person received a text that they thought came from the realtor involved in the transaction. The text asked them to wire their funds a day early to a new account. On the day of closing, they realized they’d been scammed, and the money was gone.

So, as you can see, there many reasons why emails from closing agents warn of wire fraud.

It is real and you need to protect your money.


Private lending Warning #2

Private lending WARNING #1


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