Pros and Cons of Seeking Funding from Family Members

 

 

 

 

 

 

 

 

If you think health care is expensive now, wait until you see what it costs when it’s free!
– P.J. O’Rourke

 


by Leo Sun

The one thing that holds most entrepreneurs back from breaking from the pack and starting their own businesses is money. Most people who work a 9-to-5 and have debt to pay simply cannot amass enough capital to successfully launch a business. Taking out a loan from the bank is risky and lands you even further in debt. Angel investors and venture capitalists are another option, but these professional investors will swallow amateurs whole without spitting out the bones if you disappoint them. That brings us to seeking funding from family members – the most obvious choice which most prospective entrepreneurs will cringe at picking.

The Pros

There are many benefits in receiving funding from family members. First, you know them better than other prospective investors, therefore you should know if your idea appeals to them. In addition, you will be far more at ease presenting your idea in a honest light to family members than professional investors. You know their income and the amount of money they can afford to invest. If they become majority shareholders, you can be reassured that the company will stay in the family and be relatively safe from a takeover (hopefully). If your business profits, you increase your family’s affluence. Family members won’t complain about overtime and short-term profits – after all, they are family and they are invested for the long run (hopefully).

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The Cons

The disadvantages are obvious – can you afford to lose your family’s money? Handling family money is much harder than handling investors’ money – the line between your personal and business life becomes non-existent. Your overall familiarity with your family can also cripple your professionalism – both you and your family will likely violate professional boundaries. For example, a professional investor may only require a monthly status report for your business, but a family member may end up calling you every night if they are worried about their money. Family members may also overstep their bounds by trying to co-manage the business with you and attempt to oversee and change your business operations. Family members who are invested in your company may also seek executive positions in your company for which they are not qualified.

Considerations

If you are set on requesting funding from family members, you need to set up boundaries at the beginning. Have a lawyer draft up documents to clearly dictate their roles as investors, and their privileges. Clearly present your company’s business plan and long-term projections. Offer solid fiscal targets that they can look forward to achieving. Explain clearly that, as with any investment, they can lose all of their principal, and that you cannot be held accountable if this happens. Make them sign as many documents as it takes to eliminate these loopholes. Make it clear to your family members that they will be treated as investors, and not as family members, and distinct lines will be drawn between your personal and business relationships.

 

 

a little about me and my expertise – video

LAND SPECIALIST – LAND EXPERT – INVESTMENT BROKER – ARIZONA

https://www.youtube.com/watch?v=PPs3kpKR4nY

 

 

Feel free to contact Walter regarding any of these stories, the current market, distressed commercial real estate opportunities and needs, your property or your Investment Needs for Comercial Investment Properties in Phoenix.

 

 

View my listings and my profile at:

http://www.loopnet.com/profile/14101172900/Walter-Unger-CCIM/Listings/

 

www.Walter-Unger.com

www.KLCommercialGroup.com

 

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Walter Unger CCIM, CCSS, CCLS

I am a successful Commercial Investment Real Estate Broker in Arizona now for 15 years and I worked with banks and their commercial REO properties for 3 years. I am also a commercial and  Landspecialist in Phoenix and a Landspecialist in Arizona.

1.

WHETHER YOU LEASE OR OWN

NOW IS THE TIME FOR YOU TO EXPAND, UPGRADE OR INVEST.

 

In my opinion we are at bottom of the cycle in Commercial Real Estate in Phoenix, so there is only one way and it’s called we are going up again and now is the time for you to expand, upgrade or invest in Commercial Properties in Phoenix.  The prices on deals I may get you will not be around forever.

 

2.

IF YOU OR ANYBODY YOU KNOW IS IN TROUBLE WITH YOUR BUSINESS, AS MANY AMERICANS ARE IN THE MOMENT, AND ARE ABOUT TO LOSE YOUR COMMERCIAL PROPERTY, PLEASE CONTACT ME.  IF YOUR BANK IS BEHAVING BADLY I MAY BE ABLE TO HELP YOU GET OUT OF SOME OR MAYBE A LOT OF FUTURE HEADACHES.

 

3.

WAITING TO SELL YOUR LAND ? TIMES CHANGE / IT’S TIME

  We barely could give land away the last few years, but times are changing.  Even in those meager years, I sold more land across the state than most other brokers. Before the real estate crash I was a land specialist in Arizona with millions of dollars of transactions, but then I had to change and also sell other commercial investment properties, which was fun, but I am a Commercial Landspecialist in Arizonal, a Commercial Land Specialist in Phoenix and love to sell land, one acre to thousands of acres.

Since I was a Land Specialist in Arizona and a Land Speciaost in Phoenix many of my clients, Sellers and Buyers remember me and now they are calling me again, so this is the time to get back into land and none of my clients, including future clients, will miss out on getting their best deal.

Also, if you are up-side down on your land, like many Americans, and the lender is giving you a hard time, now is the time to put your land on the market. Lenders are making deals now with short sales.  I have been working with banks for many years – I learned how to work with them.

 

If you have any questions about the 1 to  3 above, about Commercial Investment Properties in Phoenix or Commercial Investment Properties in Arizona,  I will gladly sit down with you and share my expertise and my professional opinion in Commercial Properties in Phoenix or Commercial Properties in Arizona with you.Obviously I am also in this to make money, but it could be a win-win situation for all of us.

 

Please reply by e-mail walterunger@ccim.net or call me 520-975-5207 (cell)  602-778-5110 (office direct).

 

www.Walter-Unger.com

 

 

 

Thank You

Walter

 

Walter Unger CCIM

Associate Broker

Kasten Long Commercial

2821 E. Camelback Road, Suite 600

Phoenix, AZ 85016

Cell:      520-975-5207

Direct:   602-759-1202

Office :  602-445-4141

Fax:      602-445-4188

walterunger@ccim.net

 

Delivering the New Standard of Excellence in Commercial Real Estate

 

www.walter-unger.com

www.KLCommercialGroup.com

 

 

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