Being a private lender

[David Furrer]

I have done various RE deals over the years using cash, Heloc's (years ago) and business credit lines.  I have an associate who would like me to invest in HIS project, which I've never done - I've always been the developer, not the lender.  It is a small, unique center catering specifically to specialty food / craft beer / wine tenants.  I believe in the project and the people, but I don't know how to structure the deal.  The expectation is to loan $300,00 (their full development costs) and then they will buy me out in 2 years (either from the profits or a commercial loan - they aren't looking to sell the project after completion).

I am considering loaning the money and asking for 8% annual return (paid monthly) even through the build-out phase for a total of 2 years.  Any month that has profit will be split 60% to me and 40% to them.  Then, after two years, I will get back my principal and another 10% per year for the two years. 

Is the STRUCTURE of the loan normal - monthly payments, portion of monthly profits, returned capital at the end - is that how it is usually done?  I want to be fair - are the percentages inline or too greedy (or to low)?

What are your thoughts?