Posted by Rolfe Kurtyka on February 23, 2001 at 02:58:53:
Instead of a loan, perhaps a partnership, limited partnership, or other contractual agreement.
Rolfe
Is This Loansharking? And Can I Get In Trouble? - Posted by Steve Carlson
Posted by Steve Carlson on February 22, 2001 at 23:52:05:
A guy called me yesterday who needs $5000 for a down payment on an owner financed home. He said he’d pay anything for the $5000. I said I don’t do anything with my money for less than a $10,000 profit. That was fine with him. He believes the seller would balk at the idea of him getting a 2nd on the house so a lien is not very probable.
A personal loan seems the best. The “loan” could be backed by any collateral of his I wanted and he would pay back $15,000 within 1 year with a settlement coming due in a few months. If I do this as a personal loan and I have to collect the collateral, I believe he could sue and likely win. Well, how can I structure this so he has his down payment and I have a nice profit in 12 months or so?
Any suggestions/recommendations would be appreciated.
Steve
There are less risky ways to make $10,000(NT) - Posted by Justin
Posted by Justin on February 23, 2001 at 14:46:21:
NT
Re: Is This Loansharking? - Posted by Bob (Md)
Posted by Bob (Md) on February 23, 2001 at 10:50:03:
The guy that taught me to negotiate was a bona fide junkman. Truck, overhauls, three-day stubble, rolled his own cigarettes, the works. But he knew people!
One of his rules is, “If it looks too good to be true, it’s probably too good to be true.” In other words, trust your gut. Mine says, “DANGER WILL ROBINSON!! DANGER !!”
(remember the robot on “Lost in Space”?)
Here it used to be >21% was usury (NT) - Posted by David Krulac
Posted by David Krulac on February 23, 2001 at 10:28:22:
.
Just stupid - Posted by Bud Branstetter
Posted by Bud Branstetter on February 23, 2001 at 10:28:00:
This money is to be used as down payment of a house. Either the house or his personal word is the collateral. I could set up the real estate as a PACtrust contract and have him be the occupant(RB). I had better be ready to own the house. This means getting him out and someone else in. I would want to know the real value of the house. With owner financing I would expect that I could get the note holder to discount for a refi at some point. With no money into the deal what would be his motivation not to walk at the first blip. It would be just a dumb to personally loan him money. Where is the security that says he will pay it back? Are you just buying an overpiced house because he wants it?
The problem of winning a judgement is that you have to collect that judgement. Real estate is good security. What else does he have?
Re: Is This Loansharking? - Posted by Nate
Posted by Nate on February 23, 2001 at 09:43:25:
200% interest sounds like loansharking to me. The real question is, is it illegal? That depends on your state law. In some states (such as Virginia) there is NO maximum interest rate. You can charge whatever the borrower will accept. In other states, usury laws prohibit charging more than a certain amount of interest.
Also have to question why the guy is so desparate for a $5,000 loan. Is his credit that bad that he can’t get it anywhere else? (e.g. credit cards?) That would raise a HUGE red flag for me. Also, if he has other collateral he could pledge for the loan, why doesn’t he just sell it to get some cash. This doesn’t make sense. I think the guy might be trying to scam you. He sounds too desparate.