Private Money for a Down Payment

[Andres Vanegas]

Hello,

Let's say there was a home to be purchased at 500K. Estimated repairs would be around 150K and ARV of 800K.

In regards to financing,  I wanted to come up with 20% down for a flip investment loan (100K) to purchase the property. 

Would I be able to have the downpayment lent from a number of private investors -denominations from 10-50K- to my LLC? Given that no property is purchased yet, I assume you could not secure the loans with the property (secured promissory note). Could you start as an unsecured note and transition to a secured note? 

Would a bank give a mortgage under these conditions? 

Further, if we were to fund the renovations in this manner as well, private funds lent to the LLC, could that new 150K loan be secured by the property at that point if there are already existing secured notes on it?

Not sure if this is possible or legal at all, wanted to see if anyone had tried anything like this. Open to all ideas and critiques.

[Chris Mason]

Unsecured borrowed funds cannot be used for down payment, closing costs, reserves, or anything.

Secured borrowed funds, however, can be. Check out this very relevant thread for how to do more or less exactly what you want to do.