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Lending Money To Friends And Family

Why Lending Money To Friends And Family is a Bad Idea!

Lending Money To Friends And Family

Right off the bat, lending money to friends and family is a bad idea. Yes, we like to see referrals come to us from lenders, but it’s best to remain on a professional level at all times. It is normal for people to discuss their finances with friends and family. It may eventually come up that you provide loans through Gap Investments.

What you may find is that eventually someone close to you will ask for a loan, or it may be for a friend of a friend. It is best to end the conversation there and pass the lead on to us and let us do the rest. That person will then become a referral from you for Gap Investments. At that point we’ll start our loan evaluation process.

Friends and money do not mix well together. Friends will expect favors from their good buddy “the lender.” They will expect a lower interest rate, waived fees, and extended term loans. They will think that being late with payments is acceptable. They will never imagine a time that their friend would foreclose on them.

What If You Have to Say No?

What if you review the property, proposal, and other documents and have to say “no, I will pass on it?” This can strain a good relationship. We, on the other hand, perform our thorough due diligence on the property and loan parameters and can say “yes” or “no”. We take responsibility for the failure to move forward, relieving the lender of that burden, and the friendship will continue!

If it is a good loan, we would love to see it! Use Gap Investments as the buffer. You can even play coy, and say that you leave due diligence to Gap Investments.  They are your brokers and you lend on their recommendations.

There is a reason why doctors do not operate on family members! It is hard to be impartial when it comes to helping a friend get a loan that inevitably ends badly. The person receiving the loan will probably harbor ill will to their good friend for helping them out even if the loan goes well. Do you want to really phone your best friend or family member and remind them of the late fees because they are 4 days late on payments? It makes for a lousy turkey dinner experience at Christmas or the Sunday BBQ.

Loan Referrals

Now let’s talk about referrals and how they work. Word of mouth is still the best advertising, even in this digital age. That is why we treat the borrowers and lenders fairly and with high regard. We pay referral fees to the people who recommended us the loan, upon successful closing.

Obtaining a mortgage in Costa Rica is a slow and painful process. You will be helping people in ways you cannot imagine! Simply ask them to fill out the Loan Request Form and ask them to put your name where it asks “How Did You Hear About Us?”


For more information about investing in loans in Costa Rica, contact us now by using the contact form



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