Structuring of private money deals with a partner

[Ankush Ratwani]

Hey BP community!

I'm about to close on my first BRRRR deal with all cash using a combination of a personal loan (Sofi), my own money, and private money. The private money is from a friend who is looking to partner and provide the capital while I do the sweat equity. For this first deal, we did a small loan (around 10k) that will be short term loan with a payback in 6 months once I do a cash-out refinance. I am writing up a unsecured promissory note stating the terms with 1 point based on the ARV, with 11% simple fixed interest payed back at the time of the refinance. I know this is not the best way to set up a private lending deal as this is high risk for him. I will be able to pay him back with other funds regardless in 6 months so that is why I set up this first one this way. However, in the future I wanted to see what was the best way to set this up, especially with loans of up to 40k+. I plan to do short term loans with the payback during the cash-out refinance. I have heard of different ways to mitigate risk including creating an LLC and having him loan to the LLC. I have also heard of doing it through the settlement/closing agent with a deed of trust, however, I am not exactly sure how this works.

TLDR questions: 

1. What is the best way to set up your private lending deals with a partner to mitigate risk? 

2. Do my terms make sense for a short 6 month loan? 

3. How do you guys set up 50/50 partnerships that is not loan based and the partner and you split the equity/cash flow 50/50?

Also super excited to close on my first deal in 2 weeks!