"Republican Advice"

A friend called me yesterday for some advice on a real estate transaction. Whenever anyone calls me for advice I am humbled and honored because I know what a serious decision it can be, especially in these uncertain economic times. But because I am in the business of mortgages I often receive calls from friends for advice. What made this call unique is that my friend and I have a relationship that extends more than two decades and who I would consider one of my best and most genuine friends but we couldn’t be more different politically and as a result we often have to put it mildly spirited debates. In spite of this it was still me that he called for advice.

The deal he wanted to engage with a long-term family friend of his involved my friend assuming a majority of the risk and very little reward. In fact the only way that my friend could benefit would be from his friends loss of initial principle investment with the deal going south and thus likely resulting in the loss of his friendship with that person.

After listening to him share with me his reasons for why he thought this was a good business opportunity (and there were numerous but none that didn’t end badly) I suggested that he pass on this deal altogether because of the following reasons in order of their merits;

1) There was no potential for profit without the loss of his friend’s principal investment and thus the relationship with that person.

2) The risk to him and his family was too great for the little profit potential existed.

3) Engaging in this deal would likely prevent him from being able to take advantage of a real investment opportunity which could actually result in profit without anyone that he knows, likes and trusts having to be injured in the process.

*Disclaimer – all real estate involves risk and sometimes people sustain losses in those transactions, hence the nature of a free market. But to engage in a for profit deal where the only way you make that profit is by someone else losing in my opinion is not a formula for success. In lending we call that Predatory Lending and it is illegal.

When I revealed to him these opinions, he said to me “because you are a Republican I figured you would say something like that”.

Recently the word Republican, like (fill in the blank) “Banker” has been used interchangeably to disparage (and is often incorrect) my business but what made this stand out to me was how he said it. It was almost as if it was a disparaging remark and he was sorry for having used it!

Given the context I understood that what he really meant to say is that he trusted me to give him the advice that was unpopular because when he called me that’s what he needed but what he really wanted was for me to tell him was it was a great deal and that I couldn’t wait to help him get started by making him the mortgage!

In the end I lost an opportunity to make a profit but I retained a friend and a friend also retained a friend and hopefully those friends will find other opportunities to profit that don’t require one of them to be injured in pursuit of those profits.

I don’t know if the advice was “Republican” advice or not, all I really know for sure is that was “Ricardo’s Advice”. If you or anyone you know would like to receive this kind of sincere advice from a friend in the business I always have time to make new friend.

Sincerely,

Your Friend in the Business,