Partnering in a flip with multiple people in Bay Area

[Jan H.]

I would appreciate any insight or advice any experienced flipper can give me on this.

My mortgage broker friend called me today with a potential opportunity to get in on a flip. 

Property is in Berkeley Hills, two story with the bottom part of the house if not a permitted conversion.

It's currently a 2/1.5, Purchase price is $1M, est. rehab is $250-$300k, ARV is $1.6M. Part of the play is to legalize the bottom part of the house, adding one bed + 1 bath hence increasing sqf. He is raising enough money to buy the property for cash and rehab it.

I do not have the full details yet but wanted to get some insight how these deals are done as there will be multiple cash investors in it.

He wants $150k in the deal from me for 3 months for a 10% return. After the 3rd month, the plan is to refi the house with private money (?) and pay me back. I have never heard of doing this and not sure if this is something that can be done? The project would take 6-8 months to finish I'm thinking.

What struck me was that this could be purchased with PM for a 10-12% annual rate instead of paying someone 10% for 3 months? 

I do not have millions yet and $150k is a lot of cash so want to understand my exposure which seems great. I will get some more info tomorrow but wanted to see if anyone can point me how these deals are usually done?
Thanks!