First timer doing a hard loan, need help with Lender agreement

[Tito Taiwo]

I have agreed to lend a friend who does fix and flips some cash for a property, with an agreement for a 10% ROI (I am lending 10k since this is my first time doing business with him, however I do trust him.) I was sent an Investor Agreement document to sign. Seems like a generic contract with our agreement stated on the bottom. Since I am new to this and this is my first time doing this, wanted to know if there is any clauses I should make sure is included in the agreement or any clause to watch out for. OR Maybe someone can share an agreement with me that is in favor of the Lender. Thankyou.

[Kyle J.]

@Tito Taiwo  From the sounds of it, this is going to be an unsecured loan (meaning your loan will not be secured by the hard asset - i.e. the property).  Real hard money loans do not use "Investor Agreements".  That sounds more like some document your friend typed up or downloaded off the internet.  

I know you say you trust your friend, but unless you can afford to lose that $10k (and your friendship), you really should be doing this the proper way.  

There's already post here with a response a few down that covers the types of forms that you should be using: 

https://www.biggerpockets.com/forums/49/topics/413352-private-lender---forms-required

Typically, the lender (you) provides the forms after their attorney drafts them, but the borrower (your friend) would pay for the cost of doing that.  

Honestly though, this sounds like a pretty risky transaction.  Not only are you new to lending, but - even if it was a secured loan - I"m guessing based on the amount it'd be in second position.  

Everyone goes into the deal with the best of intentions, it's when the road gets rough that things get tricky.  If you don't have your paperwork in order going into the deal on the front end, you'll regret it later on if/when that time comes.