How Can I Successfully Borrow Money From Family or Friends? [#AskBP 031]

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today on the ask BP podcast we're

talking about borrowing money from

family and friends how do you set that

up so you don't destroy both your

business and your relationship stay

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that let's get to the show hey what's

going on everyone my name is Brandon

here with the ask of BP podcast thank

you so much for joining me today and

today we're talking about borrowing

money from family and friends the

question that she comes from Scott from

Denver who said when it comes to

borrowing money or partnering with

family or friends how should you set it

up to protect both the business and the

friendship all right Scott so let me see

if I can shed a little bit of light on

this first of all when I borrow money

from family and friends the first thing

I do I make sure that I always only

borrow from people who could afford to

lose it in other words I don't want

great Aunt Betty losing her retirement

and her life savings and going bankrupt

because she lent me some money on a flip

that's just a terrible idea so I want to

treat anybody that I borrow money from

with the same carefulness that I would

anybody else I want to make sure that

they're secure and that they're

comfortable with lending the money not

that they're gonna lose it all but just

in case they did I don't want that

awkward Thanksgiving dinner so I want to

only borrow from people who have money

to invest you know so I just keep that

in mind not everybody makes a good

private lender or a good partner

I just keep that in mind I'd so watch

who you borrow from next I kind of

hinted on this already but treat that

partner or that lender that family

member a friend like a business partner

and that's it

I mean don't treat it like a hobby or

just you're borrowing money from aunt on

Elda or whatever you know like treat it

like you mean it like it's a business

the same way if you were meeting a

complete stranger who wanted to invest

in your company how would you present

the deal to them how would you talk

about the deal how would you dress when

you meet them what kind of paperwork

would you prepare so just treat them

like you would any business partner and

do it right next make sure everything is

in writing in very specific writing now

I know it's like it will seem kind of

weird right especially if you're

borrowing money from a close friend or

family member like your parents let's

say they'd be like you know we don't

need all this paperwork junk just so you

know I'll just give it to you or

whatever don't don't do that I know that

tendency will be do it because it'll

feel weird to sit down and sign all

these documents and to write everything

out but trust me people forget very

easily what was agreed upon and what was

talked about and you don't want those

bad feelings to show up later so be very

very careful and write everything down

and then take everything you wrote and

make sure an attorney reviews everything

you know make it official this isn't

just for your own you know safety and

security like having it legal it's also

because it makes it more legit in the

eyes of the person who's lending you the

money because you know again you don't

want it a month from now or three months

from now then be like you know what I

actually gonna buy a new car can I get

that money back and then they don't

understand that it was a business

transaction and they're you're like well

we signed out you know to your note on

this and they're like oh yeah but I need

that new car so I'm just gonna need that

back you know then it gets weird

so with family and friends make sure

everything gets done very very

professionally and legally and it will

help protect both your business and your

friendship or your relationship with

that party and then also when you

actually begin working with them update

them regularly like let them know how

the projects going what's going on with

it send them pictures if you can what

are you gonna do to make them feel

comfortable it'll help you to help them

to be assured about what you're doing

and to make sure that you are doing a

legit job so just be careful there you

know borrowing money from family and

friends is not always a good idea some

people flat-out would never do it I've

done it

you know it is something that comes down

to the the family and friend I think

what kind of relationship you have so if

you have a good enough relationship and

if they can afford to invest with you I

think working with family and friends is

not a terrible idea you just have to

make sure you do it right so keep that

in mind with that where you get out of

here but today's success quote comes

from good ol author Stephen King

wrote talent is cheaper than table salt

what separates the talented individual

from the successful one is a lot of hard

work I like that a lot

I think Stephen King is a good writer

but he's also a wise guy there he knows

that success takes work I mean a lot of

people can do a lot of things I'm

actually recording this right now I

mentioned on another episode but I'm

recording this here at Harvard in Boston

or in Massachusetts anyway and you know

there's a lot of smart people around

here I'm just kind of on vacation out

here and there's a ton of smart people

out here

so clearly talent is everywhere there's

a lot of people that could do great

things I mean everywhere but are you

gonna be the kind of person that

actually does it who puts in the hard

work needed I hope so

so with that let's get out of here

remember in your pursuit of your goals

and your dreams and your real estate

ambitions don't just learn like you're

doing today but go take action and do it

today with that let's get out of here

for the ask BP podcast I'm Brandon

signing off

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