Is this the way you'd do it? (Landlords)

[drainbrain]

Ozzie Osmond said:

drainbrain said:

Unsecured lending doesn't work for you for one of two reasons. 1) You've tried it and discovered your risk assessment skills weren't as good as you thought and it came a co-co. Possibly more than once. So you (probably quite rightly) decided your risk skills weren't up to it so that was enough. Lesson learned. 2) You've not tried it and aren't confident your risk assessment skills could make it work for you so you won't be trying it, which is, again, the right thing to do. Though you should be careful not to shape a belief that because it's not for you it's not for anybody.

Let me put it a different way. If you're happy to take the risk of investing in these businesses whilst specifically being excluded from participation in the upside (i.e. as a shareholder) then I think you've let yourself be taken for a ride.

Take a look Entrepreneurs Relief (from CGT) which results in a very modest 10% rate of tax on backing small companies.

What on earth has investing in businesses/small companies as an equity partner/shareholder to do with private unsecured lending?

I've been on both sides of the private unsecured lending business i.e. as the lender and as the borrower. It's not Dragons Den where money is invested for a share of the business. Because that is a 100% CERTAIN way to generate a loser one way or another. It is purely and simply moneylending.

As a lender I wouldn't be in the slightest interested in a stake in the borrower's affairs. That's their business, not mine. My business as the lender is in the timeous return of the sum advanced plus my agreed addition.

As the borrower it's the fast hassle-free facility of cash I'm after, albeit at higher interest. Not some additional back monkey. One taxman's enough thanks.

If you think moneylending without equity participation in the borrower's business is "being taken for a ride" then you must wonder why it is the core business of commercial banking as it has been since time began in every country on the planet.

[drainbrain]

Trabi601 said:

Ozzie Osmond said:

I invest equity. With an unsecured loan you've got all the risk but no opportunity to participate in the upside - a balance which doesn't work for me.

All this business done on a handshake - what happens when things go wrong? Black-balled at the golf club?

I'm thinking more along the lines of kneecapped in Epping Forest.

It's all a bit East Enders if you ask me.

So you imagine private unsecured moneylending runs something like this:

Scene: The darkened office of a nightclub somewhere in The City late at night

Da Boss: "Well 3-Finger Spike it looks like The Kid's burned us for our dough"

3-Finger Spike : "Duh, yes boss. Will I get him picked up and taken to Epping Forest for a kneecapping"?

Da Boss : "Yeah 3-Finger Spike. Phone One-Eyed Louie and tell him to get the transit ready and tell him he'll need a tool"

3-Finger Spike: "Ok Boss"

Da Boss's university educated son aka 'Brains': " Guys can I ask a question. Well, a few questions really"?

Da Boss: "yeah, sure Brains. What's on your mind"?

Brains: "Well, first of all, whose idea was it to lend this unknown teenage kid the dough in the first place"

Da Boss: " Machine Gun Mike said he knew The Kid's sister and that she said he'd be good for it"

Brains: "Hmmm. Did you think that was sufficient risk assessment to justify actioning the request"?

Da Boss : " Huh kid, what you saying' "?

Brains: " We'll come back to that in a minute. Can I also ask, in terms of recouping our loss here, how will kneecapping the defaulter facilitate things? Will it, for example, make it easier or harder for him to make terms with us for the money's return if he's crippled"?

Da Boss: "So what you gettin' at Brains"?

Brains: "Be patient. Next, tell me, having lost our money, have we assessed the additional risk we incur by severely injuring him? For example, given the cops current availability of (camera) technology and forensics capability, not to mention the potential for witnesses and the high likelihood The Kid will grass us anyway, can we justify the 15 years we'll get if or rather when we're done for shooting him"?

3 -Finger Spike: "I'll be wearing gloves, Brains, he'll never know it's me"

Brains: "And has anyone considered that NCA who're hot for us might have this place wired, or that The Kid or his sister aren't NCA Intel themselves and the whole business is a trap we're walking into?"

Da Boss : "So are you saying we should just, heh-heh, make him vanish instead"?

Brains: " No, father I'm not, because that would reduce our chances of him repaying us at any time to zero. He'll be dead, you see. And it's very difficult to collect a debt from a dead man".

Da Boss: "So stop talking in riddles Brains. You're the one who's been to school. What DO we do"?

Brains: "Well, first off, rather than sending The Boys to maim him, I think we get Stacked Susie from the cloakroom to phone The Kid and ask him to meet her in the nightclub for a drink. And when he comes, I'll sit down with him and work out a realistic repayment plan based on his current income/expenditure position. Secondly, I think we should get a DoT consumer credit licence and implement a different risk assessment strategy taking careful references from trusted sources on anyone we consider lending to, and that we consider confining our lending activities to referred sources only. Like a members only club. Thirdly, I think we devise a default programme - strictly non-violence based - aimed at maximising the defaulter's potential to remedy his position. And fourthly, father, your hair is gray and the lenses of your shades are like bottle-bottoms. You have long and loyally led Our Cause to prosperity and security. But it is time you took the rest you so richly deserve. Repair, if you will, you and loyal Spike your life long companion, to that favoured table in the family run Bistro where you and your other erstwhile associates and fellow entrepreneurs can while away the days with stories of the past and endless games of 3 card brag for matches. I, your loving son, will henceforth sit behind the mahogany desk (though I may alter the decor a tad), and comfort you in your dotage with tales of accounts showing endlessly increasing profits once we have adapted the business to practices more in keeping with the 21st century.

Da Boss: " See, 3-Finger Spike! Didn't I tell you sending the boy to that boarding school was a plan!! Son, it's yours!! Just don't tell your mother I'm not in the office anymore. And 3-FingerSpike….lose that chalk stripe suit! I've been meaning to tell you for years. It stinks of mothballs and machine gun oil"

Brains: "Goodnight father, goodnight Spike"

All exit. Lights dim and then go out.


Erm, I guess that or a version of that is how Trabi601 perceives the private moneylending business operates?? Like a 1950's black and white English gangster drama ?

[rufusgti]

drainbrain said:

Thanks, friend, that's kind.

I'm an old(ish) man and may not be here in 5 years, so let me share a bit of investment advice with you.

Found it in The Bible.

Matthew 6:34

Give it some thought.

Not great investment advice but made me chuckle all the same

[drainbrain]

rufusgti said:

drainbrain said:

Thanks, friend, that's kind.

I'm an old(ish) man and may not be here in 5 years, so let me share a bit of investment advice with you.

Found it in The Bible.

Matthew 6:34

Give it some thought.

Not great investment advice but made me chuckle all the same

I'll join you for a jar but I don't agree about the passage.

I think it should be inscribed above the door of every stockbroker and fund manager's office.