Borrowing From a Friend - What is a fair rate?

[Darrell Lee]

I have a friend that I've know basically all my life... since 2nd grade... his mom was my violin tutor in the 4-6th grade. I was friends with both of his two brothers. He was selling his house and was in a urgent bind and told me he needed $10k... I wired him $20k, no questions, zero interest, pay me back when his house closes... It got delayed, his buyed dicked him around and I gave him some advice that he took and he closed the deal and paid me back...

In the mean time, I've bought a dozen properties and have doubled my asset value now about $2 million and paid cash for all of them. So my renovations were taking longer and costing more and there was a once in a lifetime deal that I simply had to buy so now I'm short on cash. He volunteers to loan me money and I request $100k on a 1st T.D. at 6%... he counters that the interest rate is too high, so I refuse to pay him any less than 5%. Value of my house to be security is about $150k so we close the deal. No appraisal, no title insurance, I pay all the fees and had my RE Attorney who also is my Title Co. Agent close the deal.

6 months later, he calls me out of the blue and I was getting ready to call him and ask for another loan and he asks if I need more money and I say as a matter of fact... Well, he just bought an airplane and a new home and a couple of very expensive cars... I sensed a little hesitation and offer a solution, as his house was owned 50% by him and 50% by his mothers trust so they each received a bit less than $1.5 million. So I asked what kind of yield was the trust getting... He says it's getting ****... So I offer 6% interest only payable monthly due in 1 year. I want to pay him a little higher rate since it is a investment property worth about $160k and I'll borrow $100k on a 1st TD. Again same lawyer/closing agent. No appraisal or points...

I'm sure I'm paying below market rates but he's getting solid security and we know the title is clean as I did buy title insurance when I bought the properties.

What is your analysis of these deals...