Apportioning costs associated with taking a second mortgage

[Roy N.]

[Note: I initially posted this topic with a poorly worded title - thanks to autocompletion on my phone - here. I am reposting with a new title and have cleaned-up the narrative].

I've been approached by a local investor for a loan of <$50K with a three year term. The borrower has offered an existing property as collateral: a performing rental appraised at ~350K. There is a first mortgage of ~50% (180K) and I'd be secured in second position.

I have lent in first position twice in the past, both refinance scenarios. This would be the first time taking a second position.

In first position, I lent at an interest rate between 6 and 9%. This time, I would plan to set the rate a little higher (i.e. 8 - 12%) as a consequence of being in second position.

My question has to do with what fees are appropriate to assess to the borrower in this situation. My short list includes:

a) legal cost of drafting & executing agreement;

b) appraisal of collateral property;

c) fee for registration of second mortgage;

d) administrative cost of servicing;

Are these reasonable? What am I missing, i.e. should I be requiring the borrower to furnish proof of insurance with us as named beneficiary?

In the past, I used a 20yr amortization and will likely do the same this time. I am also leaning towards P&I payments, but may offer Interest with annual pay-down requirement or interest only at a somewhat higher rate.

This is by no means a done deal. I am simply doing my homework at this point to see if the return for tying up my capital for three years and the risk is worth it and thought I might reach out to the immense talent pool here on BP to learn what additional considerations should be considered for taking a mortgage in second position.