New Private Lender Need Advise on Due Diligence & Loan Structure

[Jennifer Ward]

My husband and I have been in communication with a fellow investor located in Cleveland regarding a potential JV to purchase a small multifamily in the near future. Over the weekend he asked us if we would be interested in lending him 40k for 6 months at 10% interest. He has a SFH that he purchased and rehabbed with private money but the term with the current private lender is coming to an end. His end goal is to refinance with a conventional loan but he wants to wait another 6 months after his credit score improves from his current 650 credit score to receive a better interest rate. We would create a promissory note and our names will be on the deed.

I came across this checklist: https://www.camaplan.com/resource-center/private-lending-checklist/ to learn about the due diligence I need to take. In addition to the checklist, I would also request the following: 1) background/credit check, similar to tenant screening (need advise on application to use) 2) pre approval letter from bank used for refinancing 3) referral from current lender and past lenders (not sure if this is typical?) 4) appraisal (is this standard for private lending?) 5) some form of collateral (what would you recommend?) 6) use of a third-party such as title company or attorney for the exchange of funds for the deed. 7) determine if we would be the first lien on the house, back out if we are not. I am seeking advise if there is anything else I am missing or if any of the items I listed are not typical or standard? Thank you in advance BP community for your assistance and valuable advise.