Utilize your financial knowledge, give your answer or opinion to the input question or subject . Answer format is not limited.

Is this investment opportunity problematic?
It would have to be made as a "gift", and then the return would be a "gift" back to you, because you're not allowed to use a loan for a down payment. This is not to evade taxes.  This is to evade a credit check.  The problem is that banks don't like people to have too much debt.  The bank could void the loan and go after your friends for damages under certain circumstances, as this is a fraud on the bank.  Perhaps you might be guilty of conspiracy to commit fraud or similar.   I'm willing to assume for the sake of argument that there is zero chance of your friend not paying you back intentionally.  But even so, there are still potential problems.  What if your friends end up without the money to pay?  Worse, what if something happens to them?  This is an off-books transaction.  You couldn't make a claim against the estate, as there can't be a paper trail.  You'd be left out the money in those circumstances.   You'd both be safer if your friends saved up for the next opportunity rather than trying to grab this one.   An alternative would be to buy a share of their current rental house.  That would give them the necessary money and would give you paper showing your money.  It's not a gift, it's a purchase.  You'd have to pay capital gains tax on the 15% profit that they're promising you.  But you'd both be above board and honest.