Private Lending Question - Small loan amount
Hey guys, first off I want to thank everyone for all of their help. I am looking to move forward on my first buy and hold property because of all the things I have learned from this website. I have convinced a seller to finance the deal with a small amount down! I have a business partner (best friend) who is willing to lend me the downpayment ($6,000). Neither of us have ever dealt with private lending and don't know how to properly do this. He understands he's making less than 2% in the bank so he does not mind lending me the cash for a better return.
My questions:
How do we structure this deal so that I am not screwing him?
How long of a term should the loan be for? (he doesn't mind it being a few years as long as he's collecting a higher percent than what he is getting from his bank annually)
What legal paperwork should I draw up for ease of mind?
What percentage rate should we use?
Thank you all for your input, it has time and time again proved priceless!