Advice on $30k bridge loan structure for friend’s new build

[Heidi Wilson]

Hi there, Apologies for my incomplete profile - we can’t seem to update from the app and I️ am never at my computer. I️ have 4 rental SFH properties and work full time to fund my activities. A friend of mine is building his own house and needed a bridge loan of $30k for a year before he could get the mortgage. He could have done a construction loan but the paperwork with the banks is onerous and the framers were ready now so I️ agreed to lend him the $30k. He is paying cash for his house so does not want monthly payments so he can fund the remaining construction. He anticipates house completion and mortgage within 12 mos. My idea was the following structure and would like feedback: $30k with $5k interest due 12 mos from date of loan $2500 interest if he pays me back within 6 months (not likely but if he gets a cash windfall from work and wants to pay me back early I️ want to get my money back and still make something on the deal) Is this fair? Too much? Too little? I️ am putting my own projects on hold to help this guy out but he is a good contact (he is in construction) and will help me with some other projects I️ have so it’s worth having the “goodwill” in the bank to help him out. But this needs to be “friend +” level interest payments not “family” interest if you know what I mean. Also any input on structure of loan if he gets hit by a bus etc would be helpful. Obviously we are going to a lawyer so I️ am really just looking for commercial terms here but happy for all feedback.