borrowing from friends

Have you sat down with them to explain exactly what you are going to do with their money? BIG STEP HERE.
Did you show them your plan on how to pay them back?

Going into this sit down it is very important that you show them you have a well thought out game plan here. It also might be a wise move to have a contract of repayment drawn up with your lawyer to show them your intentions and possibly they might feel a little more at ease about the partnership. Hope this helps...Jan

*cringe*

Lay all your plans out on the table and how you plan on paying them back and suggest they get a lawyer to write up the agreement instead of you suggesting to do so; that would raise an eyebrow with me.

I truly hope nothing happens with this, because there is always that chance of friction happening due to perhaps you being late with a payment(s), being short, etc.

Do you have any other options???

I think it is great that you are pursuing funding for your business. I think we all have had experiences with family and friends where money has created issues. I would structure the note with your friends based on the time frame and purpose of the funds. If it is short term, give them a good interest rate of return and ask if you can do interest only payments until you close the deal. Hard to come up with idea's for you not knowing the specifics. Like any deal, do your homework. If the figures don't work, don't do the deal. Hopefully you are in the coaching program. If so, call and get their advise. You don't need to make mistakes with the wealth of experience and knowledge the coach's have. Good luck.

What is the $20K going to be used for? Are you buying a turnkey property?

Thank you for the comments. I am in the coaching program but they are not available 24/7. I have found a house that needs work,mostly the roof but it might have termites. It is an REO and the bank accepted my offer but it has to be cash so I need to borrow that from friends or family. this house has a market value of $56,000.00 and I first bid $10,000.00 and then they came back with "Give us your best and final offer to get this done soon" so we crunched the numbers and came up with $17,000.00 and to my surprise they accepted it! I am having it inspected on Monday so I can back out if it needs more work than we can see. If all goes well I plan on reroofing it and cleaning it up and then put it up for sale with a round robin auction for $35,000.00 if it goes higher that would be great if not then we will put more into it- redo the kitchen and bath and try again. Am I getting this right? Is this the way to success? I hope so.....

I have told this whole story to my friends and told them I would pay them 10% on thier money when the house gets sold,,hopefully that would be within 2 months of date of purchase. So would a promissary note work or not? I can not afford a lawyer at this time to draw up contracts,they want $500.00 just to talk to me.

You might want to try and find that $500 or have you thought about going to a law school in your area and seeing if you can get a student to help you with your contract??? Write it out and have them edit it and give them a 'donation' for their efforts

What you don't want is a flimsy agreement because if i'm lending my friends money i'm taking the agreement to a lawyer and if they say its a flawed agreement i'm backing out no questions asked

how did this go? did you sell it or ? Was the auction a success?

There are services that will help make this official...yes, use a promissory note secured by deed of trust (1st or 2nd td), then write up the terms including loan amount, payment schedule, interest rate, etc. Then, to give your family or friends peace of mind-- use a
"contract collection service"... a service that will compute the interest, give you payment books, send the 1099's at the end of the year, etc. It will help keep it as a business arrangement. The service that I use costs $150 to set up the loan and about $9 per payment... they sent the borrower a payment coupon book, offer on line account inquiries and direct deposit to the lender for the payment. The interest is calculated daily and available to see at the click of the mouse. I always know exactly what the balance due is, etc etc.

It's a great service and well worth the fees.