Money Lending Questions?

[Larry Miller]

I've learned a ton from other's posts, but now I have a need of my own. For background, I was/am looking into buy and hold properties in San Antonio, but in my search I found that a friend, who owns his own construction company, has started flipping houses. He has done several flips already and his business is really starting to take off, so while discussing all things real estate with him I mentioned that I have some reserves and would like to get into RE investing in any form just so I can get my feet wet. Well, three days ago I got a text from him asking if I am ready to invest in a property that he is flipping. I immediately moved on this [after discussions with the wife ;) ] and we are on our way to at least getting a foot in real estate. 

Now, I know every deal is/can be different, but my question is this: What are the typical steps I should take as a lender to make sure I am protected?

I signed an agreement with him setting out the terms of the agreement (i.e. the amount I would lend, the % return, the time frame, contingencies for exceeding the time, etc.), however, I am dealing directly with him and his LLC and not really with the property (i.e. title company) at all, so I feel like I am just making a loan between friends with no protection on my end.

Now, I am good friends with this individual and I know that he is trustworthy, and in addition, he has funds (and his reputation) in the game, so I am not worried about getting screwed over on this deal, otherwise I wouldn't have done it. 

If this works out, I want to continue in this role to help build my knowledge of RE investing, but I also want to set a precedent from the start that will protect me and my investments, so any advice for me as I start down this road would be very much appreciated.