Hard Money + Owner Finance - Am I missing something??

[John Mills]

looked at and missed a deal the other day. Cash buyer snatched it up. Here were rough specs:

ARV 200K

Repairs 15K

Sale Price 100K

For some reason, seller only wanted 80K at close and a note for 20K payable at 7%. Interest only monthly payments for 23 months with

balloon/payoff on month 24.

Note was unsecured

We missed it but asked hard money lender if they would lend on a deal like that and they said no. It looked like win/win all around. Am i missing something? Do hard money lenders avoid any deals with seller financing? Im confused since the note had no ties to the property. I understand their position if the note is secured to property but if its not.....? 

[Thomas J.]

Find a hard money lender who allows a second lien.  If the seller would do the note unsecured or secured as a second lien on another property, you would have been able to close.   You could also keep him on the deed as a co-owner with an ownership stake in the house to be paid at closing after you flip it.  Also why are you buying houses to flip with no cash?  If you don't have 20 grand sitting in the bank you probably need to save before you start investing in distressed houses.