Help analyzing a deal

[Brian Alterman]

Hi all,

I have an opportunity to lend a small loan (small in terms of most deals, but not that small for me... I'm not really a private lender... yet) for a very short time and want to make sure I understand the calculations correctly.
Amount: $10,000

Terms: 30 days max (guaranteed 30 days worth of interest), 30 day extension if needed.

Interest rate 12%

Story: It's just a bridge loan in case the closing gets delayed. Right now it's all on track, but they need to pay back the promissory note for the flip and if closing gets delayed a couple of days, weeks (30-60 days max) they want a backup lender to carry this. I'm not worried about the borrower as I know them well and we are both part of a highly accountable REIA. It would be on a Promissory Note that's notarized and legal. However, it's not really secured.

Question:  12% interest, that's annual?  So, for a 30 day loan, the actual interest would be 1%?  Is that the correct way of thinking about it?  Or should it be 12% for the 30 days?

Thoughts/suggestions/advice?

Thanks in advance!

[Charlie Fitzgerald]

That's not enough return for the level of risk and use of your money.