Short Term investment structure question

[Kevin Schaefer]

Hello all one of my clients has a few deals he's getting ready to close on in East Orange NJ (one I'm the Realtor and the other I'm not). Both deals are buy and hold where they will be boarding houses that should cashflow nicely.  I've never partnered in a project before and today he told me a friend of his was getting in on the deal by loaning 5k which would go towards the downpayment and closing costs. The friend would be paid back $250/month for 12 months (staring 1 month after rehab was complete and property was rented out). At the end of the 12 months he would get his 5k investment back. So essentially for his 5k investment he makes 3k profit which is a 62.5 percent increase.  I'm thinking of putting in 5k on each deal ... 

I've been offered the same terms, or the flexibility to bring some other deal to the table. Any advice on if this is a good structure or if not what I should counter with?  Also what kind of contract should we draw up to make this legal. Thanks in advance!