Hard Money Terms for me to lend

[William Shadbolt]

I have a friend (and third owner of some of my rentals) who would like me to do a hard money loan to buy an REO for him to rehab and flip. He's looking for 10% interest, six month balloon (interest payable at close or 6 months) and I'm thinking 4pts. I'd be financing 100% of the purchase and he would pay for all the rehab. He has excellent credit but not enough income to get a FNM loan and the house we've looked at wouldn't qualify for a loan as it's in poor condition.

I know the neighborhood (own a house across the street).  I'd have a RE attorney do all the paperwork and make it a commercial loan.

Any thoughts on the terms or doing it?