Lending $60K on buy and hold - Prop value $300 - $325K. 10% interest only $500/month X 6 years.Investor will chip away at prinicpal with balloon at end for balance.Will do promissory note, mortgage, and hold 2nd pos lien after $200k 1st pos. Local investor and property in my area. Investor known to me personally thru REIA groups. Thoughts? I normally lend on fix and flip so I haven't done a longer term like this.

It sounds like a solid way to park some cash for a little while. You are also helping another investor with their goals. In 5 or 6 years, the investor should be in a better position to finance you out. There are of course things that CAN go bad, but overall, the numbers look good.

It takes lots of time to see deals to lend on and check on the construction as the rehab progresses. Also there is more risk in construction or rehab loans. Contractors can take advantage of your friends, cost overruns and just finding little things that they did not see originally. I think its safer to do the longer term loans, whether it is first or second position, just because of the construction factor.

Originally posted by @Jeanne Davis :

Lending $60K on buy and hold - Prop value $300 - $325K. 10% interest only $500/month X 6 years.Investor will chip away at prinicpal with balloon at end for balance.Will do promissory note, mortgage, and hold 2nd pos lien after $200k 1st pos. Local investor and property in my area. Investor known to me personally thru REIA groups. Thoughts? I normally lend on fix and flip so I haven't done a longer term like this.

you will lose money if this defaults..  

@Jeanne Davis what is the strategy for the property and how does the P&L look. I would just make sure you are comfortable with the current or projected cash flow before making a final decision to lend. Otherwise it’s a good move

@Jeanne Davis...thanks all for the input. Much appreciated! I decided I am not moving forward with 2nd position.