Help with structuring & understanding the loan terms

[Luke Grogan]

I am sending over my terms and requirements to an attorney I was referred to and I wanted to float it to the BP community first to make sure I am not missing anything. A partner that I've worked with for years has asked me if I want to provide hard money loans for some of his deals and ours that we do together. I secured a line of credit against a portfolio of homes I own outright, so I can make the spread, plus a few points. We have a deal that we've both walked and we like the potential and here is what he'd like: Twelve percent interest only, no payments for 6 months, and two points. We've done 11 flips together and he's done 45 in the last three years, so we are comfortable and I think the terms are fine. Is the loan straight forward such that if the amount is $100,000 then it's 100,000 X .12 / 12 so payments are $1000 per month, paid on the balloon or starting after six month, plus $2,000? Also, is there anything I need to make sure I ask my attorney to include in the note or the mortgage that any if you would recommend? As a side note, I do not plan on becoming a hard money lender, but will selectively do up to four per year with this partner so I stay under the limit for my state of needing to be licensed as a lender. Thanks for the help!