Promissory Note with 15% return

[Steven Zai]

Hi,

I was approached by a realtor/broker that also buys/flips and wholesales properties and he offered me a deal where I would earn 15% return on a property he is going to rehab and flip.  

The terms of the agreement are a 15% promissory note secured by the property with return of principal and interest in 9 months,

Just wanted to get your guys thoughts on this and if anyone has had experience with this before?

Thanks!

[Mike Lattier]

@Steven Zai 

"I just don't know how enforceable the contract is would be my only concern."

The promissory note represents the obligation to pay and contains the terms of the payback obligation, default provisions, etc.  You will also need a mortgage on the property as your security.  It is the mortgage (in some states a Deed of Trust) that gets recorded with the county title records.  I doubt a bank would want to loan him money second to your mortgage unless there is plenty of equity in the property.

If your note and mortgage are properly worded, you shouldn't have any concern about enforceability.  Of course, you would want to make sure that the property value covers your loan.  You might want to spend the extra money to get an atty. to draft the note and mortgage to ensure it's done right.  You should also make sure that this is property that you would want to own in the event he defaults on the note.