Possible Hard Money Deal - Need Advice

[Justin Howe]

Hello BP,

A friend of mine approached me about being a possible hard money lender on a property. I've never been a lender so I literally have no clue what documents or steps are needed.

Here's what I know.

- Owner owns the property free and clear

- Wants a short term (3-4 months)

- First lien position

- Asking for $110k. Property value $360k~

- Property owner is self employed, can't get a loan from a bank

- Primary residence for owner

How would you underwrite this deal (property and owner), negotiate terms, ect?

What documents/disclosures are needed?

Exit strategy...what if the owner doesn't pay monthly payments or doesn't pay off at the end of the term? Foreclosure?

Any advice is greatly appreciated.

Thank you!