Should I loan my money in this deal? Need advice...

[Harold Riley]

Developer purchased a house with a 10k lot on it for $749K.

The plan is to demo the house and build a new spec house on it to sell for about 2.5 to 2.7m.

Developer is offering me a  1st mortgage on the property in exchange for a $550K loan at 8% interest rate with interest payments made monthly.  He will be using cash to finance and build the spec house. He has already built 3 other houses in the area like this one. He is an experienced developer and don't doubt his ability. 

My question is... Is this a fair deal for me? Should I  charge a higher interest rate? Should I charge points? Should I loan less? Any advice would be highly appreciated!

Thanks!