Second position loan for rehab

[Bill McGrath]

I have a deal that's come my way through a mutual friend who is doing their first flip.  They have a hard money loan for 70% of the purchase price, and need the other 30%.  They're  offering 12% for six month, interest only, on $150K.  I've been provided the hard money agreement, which puts me in the second position.  

The house is in good shape, in so cal. Purchase price is $695K, ARV is $905K, with rehab costs estimated to be $60K.

I've been provided the holding costs, and they expect the rehab to take 6 months. 

As this would be my first foray into RE investing (much less private money lending), I'm looking for some advice.  Am I crazy for considering this?

Red flags:  This is their first rehab, second position, money tied up for six months.

Positives: Learn the process by participating, put my money to work, rehab is local.

I've seen the property (outside).  Any advice is greatly appreciated.  Thanks!!