Lending money to a friend (Advice: How should I do this?)

[Greenbean]

BTW, This would be his second home for vacation and weekend getaways.

Why not just give him the money, and claim 5 weekends a year at the vacation home?

Seeing that this will be a luxury for him, why cant he wait and save up more money? Is this a cant miss deal or is he being impatient and wanting something before he has saved up enough money?

Either way if you know his income situation and are comfortable with the 500 dollar return, I would do.

Then again this is coming from a guy who has 2500 dollars tied up in friends and expecting no return on it. Im just hoping to get the principal back.

[JSD]

After weighing this over, talking to my brother and reading peoples posts here and through Google searches I've decided against going this route. As much as I'd like to help, I don't make enough to have $5000 tied up for a year. Plus, the promissory note/contract I've been formulating has become a little over the top and might actually be offensive to a friend... People are right, there is a ton to lose (Money/friendship) vs. little to gain (my friend getting his dream vaca spot a little sooner than later).

So screw it. I just text him the bad news and he text me back "oh no worries kid" so it's over.

As always, thanks for all the feedback CB. TP's to all.

[JSD]

BTW, This would be his second home for vacation and weekend getaways.

Why not just give him the money, and claim 5 weekends a year at the vacation home?

Believe me, I thought about that. But I'm not sure I could do that much Maine. Sorry Roy 

[kenmaine]

BTW, This would be his second home for vacation and weekend getaways.

Why not just give him the money, and claim 5 weekends a year at the vacation home?

Believe me, I thought about that. But I'm not sure I could do that much Maine. Sorry Roy 

Hey, I resent that last comment
Anyway, I was about to suggest that if you could afford it AND he was really a trusted friend, AND you could accept the possibility that you might not get it back, then go ahead and lend it to him.
BUT, then you tell us it's for his vacation home! GMAB, he's out of line even asking you.
Glad it worked out the way it did though, way less stress.

[Chief]

Can the guy not do a 80/20 or 90/10, to avoid pmi?

[blake]

Ignoring the friend and risk factor, you should definitely do this.  You were asking earlier for a place that you could put money that would beat inflation. 

Loaning 5k with 12 payments of 458.33 you are looking at a return of 18%.  You are basically robbing him.  Again, this is ignoring the risk of your friend defaulting.

[Redz]

After weighing this over, talking to my brother and reading peoples posts here and through Google searches I've decided against going this route. As much as I'd like to help, I don't make enough to have $5000 tied up for a year. Plus, the promissory note/contract I've been formulating has become a little over the top and might actually be offensive to a friend... People are right, there is a ton to lose (Money/friendship) vs. little to gain (my friend getting his dream vaca spot a little sooner than later).

So screw it. I just text him the bad news and he text me back "oh no worries kid" so it's over.

As always, thanks for all the feedback CB. TP's to all.

Sounds like the best plan for both of you.

[dark_lord]

After weighing this over, talking to my brother and reading peoples posts here and through Google searches I've decided against going this route. As much as I'd like to help, I don't make enough to have $5000 tied up for a year. Plus, the promissory note/contract I've been formulating has become a little over the top and might actually be offensive to a friend... People are right, there is a ton to lose (Money/friendship) vs. little to gain (my friend getting his dream vaca spot a little sooner than later).

So screw it. I just text him the bad news and he text me back "oh no worries kid" so it's over.

As always, thanks for all the feedback CB. TP's to all.

smart move bud