Hey, BP. I've got a friend of mine who is maxed out in the stock market (as much as he really wants to put in) and he recently approached me about investing with me. I explained to him briefly about how private lending works. We have a lunch meeting tomorrow. He has about $25k he wants to put to work. While that's not really enough for me to buy a house with, I am in the process of starting another business that $25k would work great for. I'd like to build a good relationship with him and eventually convince him to move some of that stock market money into my hands. Would a promissory note work for something like this? Do I have to get it recorded like you would a mortgage. He doesn't seemed concerned about having the money secured; however, I just want to make him feel as comfortable as possible and dot all my i's and cross all my t's. I think this guy is a great person and he's proven to me time and again that he has a wonderful heart. He's a genuine guy and I just want to do right by him. As always, thanks for the help.
Get to a business attorney and have them draft the business agreement .
A promissory note should work in this case. You can have one drafted by an attorney or get a generic one online personalized with your guys' particular arrangement. It should specify how much money is being transferred, for what period, how the money is to be paid back (interest only, principal + interest), at what intervals (monthly, quarterly, annually), and whether pre-payment is allowed, etc. RocketLawyer has templates on their websites and you get a document free (I am not affiliated with them but have used their services before). You guys can have the document notarized for extra protection.
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