Combining HML and Private money in Texas

[Darryl Smith]

Hello BP,

I think there are plenty of forums discussing the theory, but I was wondering has anyone placed this into practice and what was the process! I plan on speaking with the lender as well, BUT, I have a home with an ARV of 150k! I want to use HML(hard money loan) for 85k purchase price, and use private money 24k for rehab budget! The private investor knows they would be in second position to the primary lender! My questions are as follows!

Is a signed promissory note all I would need to bring to closing at the title company to secure the private investors interest in the loan! 

Does the note count as a lien against the property, or are liens typically reserved for if you default on the loan?

I spoke with a long term lender and they discussed they see no problem with the numbers and the example is very common, but is there anything I am missing? Thanks in advance for all your help!

[Michael Heisterkamp]

The numbers sound good, my question is why would you not get all of the capital from one source?  There isn't anything wrong with what you suggested however it is just more complicated and presents more opportunity for conflict and issues among the funding sources.  If you are looking for a better interest rate, then one of the two parties will have that.  Just get all of the capital from them.