I applaud them for wanting to do more with their life. But not how they did it. That's totally idiotic. You have a house worth $450k. So you go and gamble... ALL OF IT?! And so in the (extremely likely) chance that your business fails, you have nothing to come back to.
There are always going to be people who squander opportunity. However, the whole rich people are smart and hard-working/poor people are dumb and lazy fallacy is one of those deals where people who want that to be the case keep looking and looking til they find examples to prove their point. To be fair more left leaning people like myself tend to look really hard to find examples that prove the reverse point. Having come from a family of teachers and having done amateur theater most of my adult life, I can guarantee you there are a lot of very intelligent and hard working people who have not accumulated a ton of material success. However, if you are willing to expand your definition of success to include more than economics some of these people are the most successful people I know.
The first rule of starting a business... NEVER EVER use your personal assets as collateral. If you can't find investors and the bank won't take a chance on you, then you find another way to get your start up money. You have no idea how many small business owners I see losing everything because they mortgage personal assets to get money to "save" the business.
even smart people try and fail in business... betting your house on that business isn't the brightest thing in the world.
huh?!? Basically betting the house your family lives in (not to mention a house a lot of people helped remodel for YOUR family free of charge) to start a business is just like gambling...but every family member loses if you fail
Show me a bank or investor that will give someone like these people a loan with no personal collateral to start a business. If their business was successful and turned into a multimillion dollar business this article would tout them as geniuses and heroes. But it happened to fail so they are idiots, right. When actually all they lost was 1 baller house. They can easily move into a modest house now. No big deal. Nobody died.
That's how the show started off. I watched the first season, and it was a home renovation, not replacement. They would add on, rebuild, improve etc. the home that the owners currently had, to improve their situation. I was NOT "Let's build a McMansion on a 1/4 acre lot". It wasn't until, I believe, their second season that they did their first complete home replacement, and found, I'm sure, that it was better for ABC's bottom line to just build a new house rather than fix an old one, owners be damned. And, let's face it: a lot of these people are in bad situations because of bad luck/misfortune, but I bet if we looked a little closer at their histories, there would be some rather horrible financial decisions made as well.
hellooooo!!! right here!!!! started a law firm...needed a line of credit....got one with a personal guaranty, but Texas homestead laws mean you can't take my house even if you sue me and get a judgment. giving someone a lien on your house is nuts when starting a business. i've represented banks dealing with commercial collections and other issues. this happens all the time, yaoluv...rare is the circumstance where you're using your home as collateral for a business loan. they take a security interest in your receivables and your equipment sometimes....but those belong to the business, anyway.
Thank you. Seriously, these people had a history of money problems or their house wouldn't have fallen into such disrepair. The guy that loaned them that money on the house knew they, the bank, were going to end up with it. That's the long and short of it. He will probably say he was "doing them a favor" but he wasn't. Sure you need to have courage to start up a new business, but you go in with a proposal and if they don't give you the start up money you go somewhere else. You don't put personal assets up as collateral.
I agree They tried to make A BUSINESS They tried to 'come up' They failed. . . like about something crazy like 80% of businesses failed Failure is not dumb, stupid or whatever it is just part of life. . . they can rise back from this they just gonna have to go hard at it Shoot .. I thought judging by the OP . .they spent it Trips to Dubai Rocket River
I understand However . . . I think a large percentage of poverty is ignorance Learning to make/manage money can be an expensive situation Their money could have been better spent they could have better educated themselves on the process It is know the SMART or DUMB of it it is the KNOWING and NOT KNOWING of it which is vastly different Rocket River
but you still usually have to put up something, if you failed they wouldn't have taken your house but they would have gone after other personal assets, that's the reason its a personal guaranty. most banks won't step out and give you a loan unless you've been in business a few years, and you have built up some liquidity and demonstrated you know what you're doing.
no problem...come after my other assets...but don't leave me homeless. don't put yourself in a position where someone can foreclose on your personal home where your kids sleep at night if your business fails. because, like RR said, about 80% of businesses fail. it wasn't a bright move. they needed some help in understanding what they were getting in to. i'm guessing they didn't know they had an option. i don't want to sound like i'm piling on here, because i frankly i feel awful for these people...i imagine they feel humiliated and i hate that. but outside of all that...it is not typical to give a bank a lien on your home for a commercial loan. it's just not. and i'm not faulting ABC at all. they gave them a freaking home...set up a context for beazer to give them about $100,000 more in cash. i remember this episode, actually.
absolutely, RR!!! agree 100000%. these guys likely weren't aware of the fact that giving a lien on your home is entirely unusual in taking out a business loan. frankly, i don't know what they were trying to do with this construction business, but a $450,000 loan sounds really high to me. i'm not sure they would have been aware of that, either. there are some great organizations out there that provide free counseling on things to consider when starting a business....i don't know if they get enough publicity, though. but you're right...no one should call them dumb. they made a mistake, largely born out of ignorance.
fair point...i just think it was even more important for them not to do this... because it's all they had to lose. Church needs to step up.
This family doesn't need anymore charity when there are families in worse situations who didn't squander a half million dollar home. A half million dollar home!
