Re: Would like advice please regarding flipping houses

Section62

swingaloo said:

...

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

At the least I'd be rethinking any joint accounts or other joint financial services/products so the partner doesn't take my own finances down with him when he goes.

The whole situation is one big red flag.  It doesn't seem credible the partner can't see this.

Andrea2528

Would you explain how a first charge protect someone then?

nottsphil

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

It looks like his solicitor is well placed to take the business of suing any defaulter, on top of the fees s/he'll be charging you for the contract.
His solicitor is therefore not somebody who you can trust for impartial advice as to the safety of this venture. On the other hand, every respondent on this thread has no financial interest in the outcome...

nottsphil

Andrea2528 said:

He does have an asset since partner sold him a property

Which he could have mortgaged. Even if just rented out, it will be worth significantly less than if vacant, and at best you would become an 'accidental landlord'.

Andrea2528

He doesn't want to mortgage the property but he realises he will obviously have to if the venture doesn't work out

swingaloo

Andrea2528 said:

He doesn't want to mortgage the property but he realises he will obviously have to if the venture doesn't work out

What do you mean by 'if the venture does not work out'? 

Why exactly is this 'friend' who already has assets wanting to buy a house to flip if he has no cash of his own to invest and needs to rely on your partners money to do it?

If its such a good idea and your partner is 'guaranteed' his money back plus 10%, given that neither your partner or his friend have a clue how to renovate and flip why does your partner not just do it alone and recoup all the fabulous profit this project will produce?

Andrea2528

Partner wants to do this and I don't want to do it.  He can't do it himself and wants me to do the transaction of paying the deposit online using his money to pay this other person, so they are sure of securing the property.  He knows what property it is.  He is getting stressed about it because I won't help him but I'm trying to protect him. He doesn't see it that way and I'm thinking that perhaps I should if he is so sure that it's safe to do it

Andrea2528

swingaloo said:

Andrea2528 said:

He doesn't want to mortgage the property but he realises he will obviously have to if the venture doesn't work out

What do you mean by 'if the venture does not work out'? 

Why exactly is this 'friend' who already has assets wanting to buy a house to flip if he has no cash of his own to invest and needs to rely on your partners money to do it?

If its such a good idea and your partner is 'guaranteed' his money back plus 10%, given that neither your partner or his friend have a clue how to renovate and flip why does your partner not just do it alone and recoup all the fabulous profit this project will produce?

He isn't saying that the property is guaranteed to sell.  What he is stating is that even if the property doesn't sell, then he'll get his investment back and the 10% even if they have to sell their asset to pay him, due to the first charge being in place

flaneurs_lobster

OK, I'll bite, why can't your partner pay over "a few hundred thousand" of his own money using his own account(s)?

Andrea2528

flaneurs_lobster said:

OK, I'll bite, why can't your partner pay over "a few hundred thousand" of his own money using his own account(s)?

He is using his own money