Rules of Engagement 

#1 Protection – Never EVER lend to an individual, ONLY lend to a legal entity. 

#2 Ensure there is a tangible asset to secure your money against. Sign a Promissory Note that spelled out the terms of your agreement. (Principal amount, terms, Interest rates, extension clause) As well as a Mortgage Note where the lender is in a 1st or 2nd position lien with the property, and additionally insured (Homeowners Insurance) incase of any unforeseen disasters such as a fire so that the lender is paid back.

#3 As the lender, do not send any money TO the borrower directly. Send the money to a 3rd Party Escrow company. For example, your attorney or title company to hold in an escrow account.