Private Money Loan Process with Investor

[Jason Riddle]

I'm having trouble understanding the private money loan process with another investor.

So when another investor gets involved, that's because they also agree that you have a good deal. So they agree to give you money in exchange for either 1) a cut of the profits or 2) (perhaps) to pay the money back as a loan.

For 1)
- How do you decide how the profits should be split? Say it is 70/30 for example, is that profit only realized at the time of sale?
- What about when you are receiving rental income? Should the rental income be stored in an escrow account or a joint checking account?
- Also, what happens when you want to refinance? What does the split look like then?

For 2)
- I've heard the term "promissory note", so I'm assuming that's something I sign saying I agree to pay this money back?
- How is the investor keeping track of the interest versus principal payments? Are there banking platforms that support private lending and handle these calculations?

Also in both cases, do lawyers need to be involved to make sure the contract is legal and both parties are protected?

Thank you