Greetings to you all! I have been tearing through these forums and I can see that a great many of you are providing a wealth of excellent financial knowledge here. I offer you all a pre-emptive thank you for all of your insight!
On with my question...
I have an opportunity to get in on a small partnership with a friend who I've known for 20 years. He established three coffee shops and is now franchising Freddy's restaurants (on top of other business ventures). My friend has a small group of partners and is looking for 2-3 more who can bring in enough cash to build two more restaurants ($500K each). After her gets the capital, the partnership will be closed to new investors because he wants to keep it small so that those involved profit more.
I completely trust this guy (he's pretty much been a life-long friend who has been exceptional successful in business his whole life), I know I'm not going to lose on this investment (because he would lose considerably more, which he is not willing to do), and this seems like the perfect way to get into a partnership that is well-established yet small enough where there are not too many heads trying to drive the ship.
I'd like to invest $500K into this partnership. That amount will generate (approximately) $125K/year for my portion of the partnership once the final two stores are built. All of the money I earn from the investment will go directly into the loan balance until it is paid off and then I will reinvest a good portion of the funds I earn into any future restaurants.
About my personal finance picture: I clear $100K/year, but having been recently divorced I was stuck with all of the debt (about $60K worth), and I have a student loan for about $20K (I recently finished my MBA). I have been socking most of my cash into the various debts and I will have everything paid off within two years. However, I own nothing except personal effects (no land, no house, etc.) so I technically have no collateral to offer a loaner. My job and income are VERY secure (I'm a military officer with 17 years of service with every intent of retiring at 23 years). My credit score is 600, which I know is not a good thing...but what can you do when you're stuck with all the debt after a divorce? (Hey, at least I don't have to pay any alimony or anything.)
So here is my question - Who in the world is going to give a guy like me a loan for $500K that has no personal collateral and a not-so-favorable credit score? My friend said that he already has the collateral (in the form of the businesses that he has already established), so I would assume that he could co-sign the loan so that he personally shares some of that risk (although have to check with him to be sure).
Can anyone offer any helpful advice for me...or is this an opportunity that I'll simply have to miss until another one (if one does) comes along after I pay off all of my bills and buy some tangible collateral?