Lending Large Amount to Acquaintance

efunc

Hi all,

I need some quick advice regarding lending my personal money to somebody I’ve recently met. I’m savvy enough to feel this is not some long drawn out scam, or confidence trickster, but still need to proceed with extreme caution. The borrower is a plumber who’s been doing work in my flat for the past 6 months. That’s his main profession, is qualified, has a website, came to me through recommendations and I’ve found him to be excellent at his job. Over the months we talked a lot about his sideline as a property developer. He sold his last development a month ago and now he’s found a new house for around £200k that he wants to buy and refurbish. Of that he's looking for £35k - £40k, which he can get from a bank, but he has approached me with the idea of borrowing that sum and paying it back in 4 months whilst offering me about 10% interest.

I have now experience of anything like this and have many questions, but obviously need to explore a way of guaranteeing I don’t loose my money! I guess I should find out if I’m lending to him personally or to a company he’s set up. If a company then he can just liquidate it and walk away from his creditors I guess. But even personally he could declare bankruptcy and do the same.

Are there any straight forward mechanisms to do this formally? Firms that specialise in the process, contracts, etc? I’m starting at the beginning with no knowledge, but am interested in exploring the risks and rewards.

Thanks all.

MallyGirl

given that the world is going to hell in a hand basket, there is no way he can guarantee a quick sale to pay you back.
Walk away.

TrickyDicky101

You'd have to be utterly mad to consider this at the moment.  Utterly.

[Deleted User]

Only lend it if you genuinely don't need it back.

The_Fat_Controller

Keep your money, with the world going nuts you'll need it.

DCFC79

I wouldn't do it OP, just don't, keep your money in your bank.

I know someone who has done something similar and if I had known what would happen once the money was lent I would have warned them not to bother.

What if he were to just disappear with your money, he would be gone with your money leaving you £35k £40k down.

sourcrates

A plumber with a sideline in property development, wants to lend 40k, he could go to the bank, but thought he`d give you the "opportunity" first. . . . . . . sounds like the opening line of every scam ever engineered.

In a nutshell, you have no safeguard, no safety net, no guarantee, nothing, your money is at risk the moment it leaves your account, and as said above, the state of the world just now, you would be utterly mad to even consider doing this, especially as you admit to having no knowledge whatsoever about what your doing............walk away....please.

No contract in the world can help you if super Mario loses all the money.

BrassicWoman

the timing is awful

tacpot12

If you want to go ahead with this sort of scheme in the future, you want a First Charge on the property. You will need legal advice on how to get this first charge and how to document the loan properly. Unless your pension is well funded, you have a substantial emergency fund and can afford to lose this money, lending to an individual is a recipe for financial disaster. 

efunc

OK then!! Pretty unanimous! My account of the encounter makes it sound fishier than it is. He's genuinely someone I approached myself following recommendations, and he's provided a very good service so far. The 'joint venture' in property has only really come about because we've been talking around the subject so much, largely driven by me. That said, point taken about the economy. I hadn't really considered that at all and didn't think things were actually that bad. People still seem to be buying property and indeed there is a fair amount of competition over the one he's looking at now. But point taken, I'll probably sit this one out. Thanks all for your valuable contributions and common sense

Voyager2002

There are peer-to-peer lending platforms that make this kind of loan. You could steer him to one, and you could lend your money through it (spread over perhaps ten or twenty such properties to manage risk). That way, the legal stuff to protect the lender is done properly.