Hard money lender?

[bigD]

Let's say I have relatives that have money. Let's also say I think I understand what hard money lenders are and how it works. Now if I talk to my family and convievce them of loaning me money with out points but a great interest rate for our times and it is sucured by a note on a property I buy with this borrowed money. Haven't I found a "hard money lender"?

[Dan Auito]

I would have to agree somewhat! Relatives are probably not going to charge you 15% int and 10 points so I think maybe we could call it relative money or soft money with strings attached! :SM062: Nothing wrong with it when you have a great deal in the works.

[Aldo]

I respectfully disagree with Dan.

Never, not ever, even think about conducting any kind of business with anyone you know. In my many weeks (well okay, years) I have seen countless friendships destroyed and family relationships damaged beyond repair by investors who were sure that it could never happen to them. There are no (or, at least, very few) exceptions to this hard and fast rule. We all know that not everyone thinks alike and the smallest of differences of opinion (or fact) can easily lead to serious disagreements.

I have a family member who could buy and sell my company in a hearbeat. I would never ask him for a dime (for business purposes). I could be the exception to the rule, but I don't know that to be a fact. My family (and friends, etc) are far more important than saving fifty bucks a month (or whatever).

[REIaddicted]

You do hav a valid point my friend. But I have to say, when we are starting out.. we need to take advantage of those that could help us.

Just have things in writing, be professional and seperate the personal from business. Be fair, ethical, above board, then our efforts will help ourselves AND the family member.
My 2 cents :SM089:
Lisa

[Aldo]

I, personally, would rather start out by using hard money than risk damaging a family relationship or losing one of my two friends. Here's a conversation I could envision after investing with Unlce Fred. We have a 50-50 deal. He does the funding and I do the managing.

Aldo: Hey, unk, I just got a letter from the bank about payment arrears.

Uncle Fred: I know I sent the payment. Let me check my records and I'll call the bank and get back to you.

Aldo: (two weeks later) Hey, unk, I just got another nasty letter from the bank. Whassup?

Uncle Fred: Yeah. Now I remember. They were gonna repossess my car, so I had to make a payment and couldn't make the mortgage payment. Can we raise the rents?

Aldo: Can't raise the rents until the leases expire in 8 months. It was $700 to bail out your car, where did the other $800 go?

Uncle Fred: C'mon. Get off my case. Okay. I lost it at the casino, but I know I can win it back when I go back next month (ed. After March rents are paid).

This is but one out of hundreds of possibilites. Uncle Fred is one of Aldo's most favorite people in the world. Please advise me on how you'd handle that one. Unless I'm missing something, I can't think of a comfortable way to handle that simple (made up) example.

[Just Information]

When using family and friends as private investors you must at all cost honor your word. Yes one would be better served not to involve family or friends in business but if you are honest and will do what it takes to keep your word you will have great success and will not breach the relationship.

[REIaddicted]

Aldo,
I would know unc Fred's reputation and wouldn't have worked with him... even though he is my favorite. I am not saying willy nilly with every family member.. we still have to be selective so things like that don't happen.

That is why we get along so well, I learn from you AND we can agree to disagree. :smiley5:
Lisa