Re: Would like advice please regarding flipping houses

Andrea2528

Hoenir said:

Andrea2528 said:

So then a first charge doesn't provide security for partner's investment if the person he is lending to has assets that are worth at least double that amount?

No it doesn't. 

Why doesn't it?  His solicitor has said that if the person he is lending to has enough assets to cover the amount of investment then he will get his money back and the 10% if it's agreed between him and the person he is lending to

eskbanker

Are you just relaying his inevitably defensive comments or are you also unable to see the collection of red flags here?

Andrea2528

I would prefer that he didn't go ahead with it

Hoenir

Andrea2528 said:

Hoenir said:

Andrea2528 said:

So then a first charge doesn't provide security for partner's investment if the person he is lending to has assets that are worth at least double that amount?

No it doesn't. 

Why doesn't it?  His solicitor has said that if the person he is lending to has enough assets to cover the amount of investment then he will get his money back and the 10% if it's agreed between him and the person he is lending to

If it's agreed being the operative words. At the moment it isn't.  

Alexland

10% is a low potential return for the likely risk and time this might take.

IMHO this is not a good opportunity for investment it sounds like a very poor choice.

If they really want a high risk investment in property development invest a few grand with someone like Kuflink who are professionals with years of experience in paying people back and can diversify the investment across a portfolio of properties. Even then I wouldn't risk anything more than they can afford to lose.

swingaloo

So your partner lends someone say £200,000 to buy a property and renovate it to flip. Imagine the cost of the property is 160,000 and 40,000 allowed for renovation. Even if the is then put up for sale after renovation for perhaps 250,000 there will be very little profit after all tax and fees are paid.

No solicitor could possibly guarantee your partners money back and 10%, kits madness to think they could. Its fine saying the other person has assets so you could sue for the money but you would need a watertight agreement to fall back on and it would cost a fortune in legal fees to do that.

I would rethink the relationship if your partner is so gullible.

Brie

Andrea2528 said:

Hoenir said:

Andrea2528 said:

So then a first charge doesn't provide security for partner's investment if the person he is lending to has assets that are worth at least double that amount?

No it doesn't. 

Why doesn't it?  His solicitor has said that if the person he is lending to has enough assets to cover the amount of investment then he will get his money back and the 10% if it's agreed between him and the person he is lending to

OK so say the person doing the flipping does have the assets to pay back the investment and 10%.  How do you or the solicitor know he hasn't made a similar promise to several other investors.  (movie plot for The Producers?)

And you have said "His solicitor has said that if the person he is lending to has enough assets".  So the solicitor doesn't know for sure and so there's no guarantee of anything.

Andrea2528

I think that he's probably led partner to believe that he can make a lot of money in a short amount of time. 

Andrea2528

He does have an asset since partner sold him a property

Tucosalamanca

I sometimes wonder why more people aren't scammers. It's clearly a lucrative business.

There's little come-back when found out and an even smaller chance of court appearance/prison.

MSE sees people who have been conned on a daily basis.

This thread just proves how easy it is, despite numerous people saying it's not a legitimate proposal, OP still wants to believe that it's a genuine opportunity.
The friend has loads of assets - massive red flag, right from the start...

At least OP came here before any money has changed hands and not a few months after the transaction, when 'the friend' needs additional funds for unforeseen issues or an even bigger opportunity....