1st time private lending -

[Jeremy Michiels]

I'm evaluating lending $25k to a colleague who is been fix/flipping for some time. He has a good track record, but I have never lended money so I'd appreciate any guidance in how to set the terms and what steps are critical to ensure the relationship doesn't go south. Currently he only needs funding to help cover the rehab completion.

Here's a summary of the deal

ARV: $315k (I've verified that this is in the ballpark +/- 10k)

Purchase Price: $130k

Repairs to date: $32k

Add'l rehab estimate: $25k << my piece

Proposed terms from my colleague:

I am offering 13% annual on a 12 month note with a guarantee of minimum 10% return. Investor will have a first lien on property. Property was purchased for cash. No liens. This is a strong market, excellent neighborhood. I expect to complete rehab within 8 weeks and we add 3 months for sales/closing process. All investor funds distributed at sale closing. I expect to distribute in 5 months.

Question #1: Does anything look wrong with this deal on face value? 

Question #2: I assume I need a RE Attorney to work up the promissory note/lien...Is this correct? 

Question #3: I'm in Texas. Are there any special considerations for private lending in Texas?

Question #4: What should I have asked, but didn't (b/c I have no idea what I'm doing :)

Also, not sure if it matters but I will be using a SDIRA for funding. I appreciate any and all feedback.