HARD MONEY/PRIVATE LENDERS

[Robert Cowan]

Good Morning. We currently own 1 rental property, but would like to acquire more. I have never used anything other than traditional financing, so the workings of short term notes with hard money/private lenders are a mystery to me. 

For example, if we were to buy a foreclosure property for $40k and secured a 1 year, 10% note how would payments and repayment work out? Would we pay an agreed upon monthly payment and pay the 10% ($4k) all at once when we settle the balance of the note or would we pay interest only payments for the life of the note and repay the balance at the end of the year? Thanks in advance for any information.