Borrowing money for property investment

jamie2024

First time posting on here. Just looking for advice and best way forward. Myself and a very good friend of mine who lives in Germany with his partner. We are looking at investing money into a B&B in Germany that they already have. €30,000 euros each. Need the money for redevelopment of the property.  We expect to have the full €60,000 back by the end of year. I am just looking for general advice as to where is best to try and get the money. I live in the UK I have a full time job, I live with my parents. I don’t have the best credit score. 

Any advice is very much appreciated thank you 

retiredbanker1

If you want my advice - forget about it!

If you don't have the money why have the worry about repayments especially if your credit files are not squeaky clean?
If you apply to a mainline lender and mention 'property' they will decline you as it is outside their lending guidelines.
If you approach a business lender they will decline you as they will have no security.

Ask yourself why your good friends cannot get funding in Germany?

I repeat tell them nicely NEIN.

CliveOfIndia

I have to agree with the previous poster - these kind of things can often be risky investments.  Whilst I'm not saying it will definitely fail, you do need to approach it with a healthy degree of caution.

jamie2024 said:

We expect to have the full €60,000 back by the end of year.

That's the first thing that would concern me - on what data are you basing that assumption?  If that's the profit (not just turnover) that the property has generated each year for the past 3 or 4 years then fair enough, it's probably a reasonable enough estimate.  But if you're just plucking that figure out of the air then it's a different matter.

jamie2024 said:

I don’t have the best credit score.

Whilst your score is irrelevant, if your credit history is not rock-solid you may find it difficult to obtain a loan.

And, again as the previous poster notes, many (most?) lenders don't really like giving out personal loans for property or business ventures.  You'd need a business loan - for which you'd need a solid business plan, financial forecasts backed up by solid data, and you'd usually need to stump up a fairly substantial investment from your own savings.

I'm sorry if this all sounds very negative - I would genuinely love to see you make a go of it and see some healthy returns from it.  But being realistic, I would have to advise you to tread extremely carefully and make sure you go into it with your eyes open and with a pragmatic view of the likely costs and returns.

Nasqueron

If the business earns enough to guarantee doubling your revenue, why don't they just save the money they currently earn and develop it themselves?

jamie2024

Nasqueron said:

If the business earns enough to guarantee doubling your revenue, why don't they just save the money they currently earn and develop it themselves?

I would like to thank you for your comment, all advice is greatly appreciated. What I should have said in my post was that the B&B is a joint venture between myself and my friends over there. I have been friends with them for 10+ years. So I think it’s safe to say I can trust them. The property is in good condition just want to add some things to it, it’s too long a story to explain. We can guarantee that the €60,000 will be paid back by end of this year, booking are at an extreme high for the area that the B&B is located. Very popular tourist area. 

jamie2024

CliveOfIndia said:

I have to agree with the previous poster - these kind of things can often be risky investments.  Whilst I'm not saying it will definitely fail, you do need to approach it with a healthy degree of caution.

jamie2024 said:

We expect to have the full €60,000 back by the end of year.

That's the first thing that would concern me - on what data are you basing that assumption?  If that's the profit (not just turnover) that the property has generated each year for the past 3 or 4 years then fair enough, it's probably a reasonable enough estimate.  But if you're just plucking that figure out of the air then it's a different matter.

jamie2024 said:

I don’t have the best credit score.

Whilst your score is irrelevant, if your credit history is not rock-solid you may find it difficult to obtain a loan.

And, again as the previous poster notes, many (most?) lenders don't really like giving out personal loans for property or business ventures.  You'd need a business loan - for which you'd need a solid business plan, financial forecasts backed up by solid data, and you'd usually need to stump up a fairly substantial investment from your own savings.

I'm sorry if this all sounds very negative - I would genuinely love to see you make a go of it and see some healthy returns from it.  But being realistic, I would have to advise you to tread extremely carefully and make sure you go into it with your eyes open and with a pragmatic view of the likely costs and returns.

I would like to thank you for your comment, all advice is greatly appreciated. What I should have said in my post was that the B&B is a joint venture between myself and my friends over there. I have been friends with them for 10+ years. So I think it’s safe to say I can trust them. The property is in good condition just want to add some things to it, it’s too long a story to explain. We can guarantee that the €60,000 will be paid back by end of this year, booking are at an extreme high for the area that the B&B is located. Very popular tourist area. 

No we are not taking that figure out of fin air at all. 

It’s ok I totally appreciate everyone’s comments that’s what this site is for. As long as people are nice and straightforward and not rude etc. Thank you I really do appreciate it, we are making a go of it, even if I don’t get the €30,000. I’m not going into too much detail about it, but it works differently in Germany than here in uk. Alongside the B&B I have a studio that is being advertised with the B&B so I shall be making money on that. The money will be used on many things and ideas that we have. It already has many bookings for the year

with regards to costs there is only 1 cost which is completely covered. Like I said before it’s a different set up in Germany compared to uk

jamie2024

retiredbanker1 said:

If you want my advice - forget about it!

If you don't have the money why have the worry about repayments especially if your credit files are not squeaky clean?
If you apply to a mainline lender and mention 'property' they will decline you as it is outside their lending guidelines.
If you approach a business lender they will decline you as they will have no security.

Ask yourself why your good friends cannot get funding in Germany?

I repeat tell them nicely NEIN.

I would like to thank you for your comment, all advice is greatly appreciated. What I should have said in my post was that the B&B is a joint venture between myself and my friends over there. I have been friends with them for 10+ years. So I think it’s safe to say I can trust them. The property is in good condition just want to add some things to it, it’s too long a story to explain. We can guarantee that the €60,000 will be paid back by end of this year, booking are at an extreme high for the area that the B&B is located. Very popular tourist area. 

No we are not taking that figure out of fin air at all. 

It’s ok I totally appreciate everyone’s comments that’s what this site is for. As long as people are nice and straightforward and not rude etc. Thank you I really do appreciate it, we are making a go of it, even if I don’t get the €30,000. I’m not going into too much detail about it, but it works differently in Germany than here in uk. Alongside the B&B I have a studio that is being advertised with the B&B so I shall be making money on that. The money will be used on many things and ideas that we have. It already has many bookings for the year 

 I don’t have the worry about repayments at all, I know that they are covered with us having them completely paid off by end of the year. 

pramsay13

It's going to be almost impossible to get that kind of loan here for that purpose. Can you not borrow in Germany using the building as security?

jamie2024

pramsay13 said:

It's going to be almost impossible to get that kind of loan here for that purpose. Can you not borrow in Germany using the building as security?

Well I don’t know if I don’t try I suppose. If I can’t it’s not the end of the world. As I said it’s still going ahead, just without the money from me. As I have my studio which will be part of the B&B. 

I don’t know if I will be able to with me not being a resident in Germany. 

Hoenir

jamie2024 said:

Nasqueron said:

If the business earns enough to guarantee doubling your revenue, why don't they just save the money they currently earn and develop it themselves?

I would like to thank you for your comment, all advice is greatly appreciated. What I should have said in my post was that the B&B is a joint venture between myself and my friends over there. I have been friends with them for 10+ years. So I think it’s safe to say I can trust them. The property is in good condition just want to add some things to it, it’s too long a story to explain. We can guarantee that the €60,000 will be paid back by end of this year, booking are at an extreme high for the area that the B&B is located. Very popular tourist area. 

If the business is generating that level of profitability after all costs are factored in. Then there should be no reason why a lender couldn't found in Germany. Though I suspect the business plan presented my fail at the first hurdle. As in financial terms it's too good to be true. 

fwor

jamie2024 said:

I have been friends with them for 10+ years. So I think it’s safe to say I can trust them.

I don't think the previous posters necessarily mean you can't trust their intentions. But you may be wise to consider their judgement. They may be sincere and trustworthy, but may still not have the ability to actually do what they think they can do.

Something that people can sometimes fail to realise is how much the act of redeveloping a property can cripple its ability to bring in money. Customers may be unwilling to stay at a property while it is looking like a building site?