A realtor friend asked me if I'd be interested in making a hard money loan to an investor he does not know at all -- and who wants to use the funds for a project in Panama. 

The reason he won't get a traditional hard money loan is because "his 1st mortgage that he's ad since 1996 is for $141K and at 2.9% and he doesn't want to sign it away to a hard money lender who will demand to be named on the first mortgage"

He will give me a 2nd loan on his property in Austin where the LTV is about 61% and pay a few points higher than a traditional hard money loan. The loan amount is wants is $180K. 1st mtg is $141K. Fair market value is about $530K

He's looking for a 6 month loan.

I've never done a loan of this type before and am curious:

1) does this sound fishy?

2) how do I protect myself (as far as what type of documentation should I demand to see, what should I be named on, etc.)?

3) Other than running a title, how else can I be sure there are no other encumbrances on that property?

4) any other caveats or red flag warnings I should be noticing?

5) anything else I should be asking?

6) run far away and as fast as I can ... or is this a decent opportunity?

Thanks in advance.