ccarbajal08

Recently, a close family member asked to borrow a significant amount of money from me. I'm open to helping him. However, I have two concerns. One, his wife doesn't work because she believes in homeschooling their son. I'm not against homeschooling. At the same time, I feel that when push comes to shove, which appears to be now for them, she can put him in public school and get a job. Two, he's using the money for a down payment on a loan modification of the mortgage of an investment property. If he doesn't have the funds for a down payment now, how will he ever "catch up" financially and pay me back. In their current situation, it seems unrealistic. I'm afraid that this lender-debtor dynamic will make our relationship awkward.

How can I politely tell him that I'll consider lending him money if we can (1) agree on a binding payment plan and (2) after his wife gets a job?

Gfaze

:shakehead I wouldn't do it. Loaning money to family might as well be giving money to family. It's awkward to ask for the money back because they'll most likely try to use "family" as a way to avoid paying you. This will not only cause tension between the two of you but the rest of the family as well.

If you feel compelled to help him despite the probable consequences, only loan as much as you're willing to lose.

One more thing, if you do loan money write EVERYTHING out on paper and both of you sign it.

Sarlacc

Well...number 2 isnt your place to tell him anything.

Best idea is to say, we are family and because of that I can't in good conscience lend you the money over the troubles it could cause.

msmching

sucks to be in this position.

i personally, will not do any of the given choice that you put down.

good luck with it.

dallison

i turned down my brother in law when he asked me, we're still cool.

SouthernBoy

Your fears are well-founded. The old saying, "never mix money and family or friends" is a universal truth for a reason. I'm surprised he came to you without first exhausting his own options; wife going to work, both tightening the belt, etc. This tells me he may see you as an easier mark.

And when the time comes that you start bugging him to pay you back, it is YOU who will be made to look like the bad guy. Lastly, once that door has been opened, it becomes very hard to close it. I've had to turn down similiar situations (for differing reasons) three times with family members. It killed me at the time, but I knew it was the right thing to do.

Whiskers

Its never "borrowing"...Don't expect to get it back....I know from experience.

e30cabrio

iTrader: (6)

Unfortunately I know from experience that this ends badly.

Kindly explaining I have my own monetary challenges and am unable to help at this time would be my response. (Although untrue)

The last time I entered these waters I "lent" my two year old Suburban to my Brother in Law, that was eight years ago.

I never got it back as he thrashed it and rendered it unusable and the discussion with my Wife regarding getting him to pay for or repair it was unpleasant at best, it was easier to write it off.

Good luck, I know this sucks.

SouthernBoy

And I'll bet you wound up looking like the bad guy.

SouthernBoy

I got into a discussion about something like this with one of my daughters years ago. The discussion arose because I refused to lend my pickup to a neighbor who asked to use it once. I told him I would be happy to help him and I would drive my truck, but I didn't lend my vehicles out. My daughter thought this was not a good move and said something like, "what if their child had suffered an injury and needed to be taken to the hospital?". I said I would drive and not lend my car (the car was the subject now).

In such a situation, you can bet your neighbor is not going to be thinking about driving you car the way you want them to when they are trying to take their child to the hospital. Also, there is the issue about blood in your car. Suppose they run the front up on a curb in their haste and damage your alignment and front end? Or worse, hit a pole or something. When you hit them with paying for the damage plus a rental, what are they likely to say?

Sorry. I will help, but my property is mine and stays with me.

e30cabrio

iTrader: (6)

Yup, but only to my Wife as I am smart enough to have dropped it.

I look at it as cheap in the long run as he has not asked us for anything since.

He is unfortunately an alcoholic that hes been bailed out in every sense of the word by every member of the family for years, his parents pretty much support his family (four kids & Wife)

It is a shame, when sober he is the most intelligent, nicest person you could hope to meet.

I avoid him like the plague.

The Suburban was an "extra" vehicle, he had totaled his car (surprise surprise) my Wife insisted we loan it to him bla bla .

I now get to say No, I will drive them but no one takes our vehicles.

gatrhumpy

iTrader: (1)

Down payment on an INVESTMENT property?!

I would not do it for that. Are they kidding you? If you are considering this, here would be MY terms:

1.) Three percent interest over 12 months.

2.) Wife gets a job.

3.) Contract that is legally binding and signed and notorized.

If you don't have the balls to tell them this information, this situation will not turn out well. Good luck!

gatrhumpy

iTrader: (1)

Respectfully speaking, I would beg to differ if they want the money. I could place any sort of conditions on loaning money to people, it's up to them to take it.

SouthernBoy

This is why he continues to do as he does. If family members had never started this, he would have quickly found out that his behavior has a consequence. Secondly, perhaps you should have said "no" to your wife and let it stand. There are times when you have to take the reigns and put your feet down. Not trying to chastise in any way, but when push comes to shove, the man should be the one to take the final decision - most of the time.

I've also had several alcoholics in my family line (including immediate), so I know how that can be. But tough love can save your sanity.

SouthernBoy

Yep. If it's your money, you can do anything you want. If you laid conditions upon a family member who came to you for money and they started to bitch about it, that should send significant signals to you that this is something you do NOT want to do.

SouthernBoy

Here's a more extreme scenario but one which happens all the time; an elderly person (mom or dad) moving in with grown children.

Let's say your father has died and your mother is getting on in years and can no longer handle living alone, paying the bills, and just doing the day to day things we all do. You have the option of having her put in an assisted living or nursing home, or coming to live with you. So you decide that she will live with you.

Both you and your wife work and the kids are grown and gone, so during the day, your mother is alone in your house. Old people regress and lose their mental and physical abilities as we all know. So one day mom is cooking soup on the gas stove and goes into the family room to watch a little TV while the soup heats. She falls asleep.

The heating soup becomes a fire and soon your kitchen is burning. Mom wakes up to this and in fear gets out of the house and goes next door to have a neighbor call the fire department. In the meantime, your home is starting to burn down.

Now what do you do? Are you so pissed at your mother for partially, or completely, destroying your house that you can't see straight? Or do you comfort her and tell her everything is Ok while you view your burned ruins?

Hard decisions but ones which should and need to be considered BEFORE they become reality. My wife and I had to take just such decisions twice; her dad and my mother. You love them and want to do for them, but you also don't want to lose your home and everything in it.

Aman

I think a good way of handling this would be to politely refuse him the money, tell him that it would hard on you as well, but suggest things that they could do to improve their financial situation.

1) Get rid of the "investment" property. Investments are for when you can afford it. They can't. Asking family for a loan on an investment is ass-backwards. Is he upside-down on the loan?

2) Like you said yourself, try to convince the wife to get a job and get the kid into a public school system. She can still tutor him in the evenings if she thinks the school system is inadequate. But I find it irresponsible of the wife to let her husband work and not support the family financially, especially if they're having this kind of trouble.

However, if he ends up going to someone else for the loan, then it's just a downward spiral for them.

Best of luck with whatever you decide to do.

e30cabrio

iTrader: (6)

I agree and as a result of that I have said and done just that and will continue to say remember the Suburban?

He did me a favor in the long run.

As far as the Family enabling his behavior, I agree 100%, His parents are very wealthy, they have funded numerous businesses which he has run into the ground, he currently "works" for one that has been taken over due to his mismanagement by a "friend" I have no idea exactly how that transpired.

svtmike

OP, I'd say no way. If a lender with all the tools of a diversified investment capitalist won't lend him the money, that means the risk is much higher for you. Just because the investment is a tangible asset doesn't mean you need to underwrite his investment losses. You wouldn't give him money to prop back up the price of stocks he'd lost money on, right?

An alternative, IF YOU THINK THE INVESTMENT IS WORTHWHILE AND THAT HE IS A GOOD INVESTMENT PARTNER, is to say no I won't lend you the money but I'm willing to become a co-investor/owner with you.

doopstr

He should just sell the investment property to raise cash if he is in trouble. Adding more debt is not the answer. I'm not even saying that because you are a family member, its just financially stupid.

If the investment property is not worth as much as he owes then I guess he should just let the bank foreclose on it.

svtmike

^^^ I'll bet he's upside-down on the loan.

phee

iTrader: (5)

you shouldnt loan anyone money unless you were compelled to do so in your heart. as in you offering it.

if you have doubts its because you shouldnt be doing it.

perhaps he is exactly in the place he needs to be for him to learn a lesson and do better in life. dont tamper with that

JerZDevil

iTrader: (1)

Did it once for a friend (not anymore) and a family member. Never again.

If you are going to do it, make an agreement and have it in writing.

SouthernBoy

I just re-read what I wrote to you and I want to thank you for not taking me to task for perhaps entering into areas which are none of my business. I honestly was not trying to chastise or reprimand you in any way for not standing up to your wife the first time. That is your business, not mine and I was out of place to go there.

So thanks for being civil. I hope I didn't go where I was not invited in this.

Shadzilla

I've NEVER heard of any of these situations going well. Unless you are prepared to both lose the money for good and destroy your relationship with this person, I would highly advise against it.

SouthernBoy

That's for sure. And you know what really irritates me is this. Say you lend some family member some money. Then at some time around the agreed upon time to pay it back, usually verbal, he puts you off with excuses. Word gets out to other members of the family and suddenly YOU'RE the bad guy for wanting to be paid back. They side with him and pressure is brought to bear against you for expecting that the right thing to be done - pay you back.

So you are admonished for this and told to "just forget it".

e30cabrio

iTrader: (6)

No problem, I sent you a PM so as to not clog the thread with another outside post.


This has happened to me, FWIW.

teranfon

Lending money to the majority of family members is a rather risky endeavor. Do not expect to be paid back. And if you are eventually given your money back, consider it to be an unexpected surprise.

I'm sure he knows he's placing you in an awkward situation, and you're going to have to make a decision whether or not you will loan him the funds. Nothing wrong with family members helping each other out, but doing so often involves risk and eventually conflict. You're going to have to decide whether or not these risks are worth taking, and whether you're prepared to deal with the consequences. And either way, you need to tell him the reasons for helping him or not.

I noticed you explained that his wife is not prepared to get a job because they prefer to home school their child. Admittedly, this bothers me somewhat. Aren't you in a sense being asked to financially support their endeavors while they choose to support a particular lifestyle? Perhaps I'm looking at this wrongly, but it shows to me that they would rather not have another source of income while expecting others to assist them financially.



Terry

Sarlacc

You're right you can.

What I'm saying is, in general, its not your place to tell someone else's wife to get a job. That is and will considered by many crossing and the line and even "attacking" the wife. That territory you don't want to enter, you don't know how fiercely someone is going to try and protect their loved ones.

And BECAUSE you can't seriously make such a demand, you just don't lend them the money if you see that as being one of the solutions to the problem you know wont change.

Will Y.

I agree with everyone else here-- don't do it... UNLESS the current cash flow on the property is positive, the loan mod is just for better loan terms and your money is a "bridge"/closing costs-type loan. Even then, I wouldn't condition the loan on anything but repayment in a certain time, and I'd privately treat the money as a gift.
BTW, your family member will be pissed at you for presuming to tell him how his family should live if you even mention that his wife should get a job, and I agree with you that the loan mod to an investment property sounds like a losing proposition absent positive cash flow.

FWIW, I haven't lost money to relatives on loans yet. We made short-term bridge loans to two of my bros-in-law related to their primary homes which we privately viewed as gifts (family ), but one was repaid within the time of the note he signed (1 or 2 years) and the other was repaid within 2-3 months.

Eggplant-EX

I have lost a friend over a loan (he kept forgetting what he owed me). In the end, I decided that I would not lend money but give. Give what you can afford to not see ever again but don't lend a chunk.

I am in the same boat again. Loaned out a chunk to g/f to pay off a high end interest c/c and she is supposed to refi/equity her home. It has been almost 3 months now and she is waiting for the equity to come through. It annoys me as once she paid off the c/c, the refi/equity was not too high on the List to complete.

Once you loan out the money for your family member to re-organize a bad debt, either the debt will still go down the tube or they will have no money over to repay you.....

Sucks to be you.

Costco

I would politely refuse, the way e30cabrio said.

I know someone who is even in a worse situation, and the poor guy has no idea what to do. It's not just a friend who needs money.... it's his wife that needs the money for her parents, money that neither he or his wife have. Not to mention he needs the money to help his parents also....

good luck.

fuzzy02CLS

iTrader: (2)

If he needs money he should maybe get out of that investment property. That's just a dumb thing to lend out for.
No way.

Steelers Wheels

I was thinking that maybe you take an equity position in the investment property instead of a loan- but I doesn't sound like this is a good investment in any form, and you could possibly end up having to keep putting money in, so run away from that idea

If you are thinking about giving the money, even if you have no expectation of it being payed back- think about this scenario( which happened to a good friend of mine) - Say you "give" the money- Everything is cool until a year or two when he sells the property- Sale is made, and instead of repaying the money to you, he either reinvests the money, or worse, buys a new car/ goes on a trip whatever- could you live with it?

moeronn

The only way I would lend him the money is if I never wanted to see him or the money again.

97BlackAckCL

iTrader: (6)

Like others have said, if you loan it out, don't expect it back. I would say no, sorry I don't have it

Majofo

Good friends (including family) don't ask for money or put you in a position like this anyways. Asking for money making you feel like the friendship / family ties are on the line is a bs move.

If you do decide to loan him money, get full disclosure from the parties involved. Have your own contract written out of a payment schedule or have him do monthly automatic bank transfers to your bank acct.

thepreludedude

only loan as much as you're willing to lose.


^^ditto.



on a side note....since i'm not your friend or family member, can I get a loan

ccarbajal08

I really appreciate everyone's responses. I'm going to tell him no. However, I haven't called him back yet as I've been busy. He's already left me a message asking for the $$. It appears he's in a tough position. I feel for him.

LaCostaRacer

I probably wouldn't do this deal based on what I read. If they're that upside down to need a modification, it's probably going to end bad anyway for them.

Refer them to www.prosper.com and maybe offer to buy a 'share' in the portfolio to show your support. This way you help them out and they find out what reasonable terms are. Also the risk is spread across many people besides yourself. The relative is simply looking to get out of a bind and probably doesn't care how that happens so a site like prosper might help them.


Before lending any money, you would want to see if the investment is good enough based on your terms. If you wouldn't buy the investment yourself (in the figurative sense), you probably shouldn't loan money. Also it's vital to have a time window when you can get your money back as well. The relative should know that the loan is not on indefinite terms.

3% is way too low for this type of deal as well.