Understanding Lien Positions for Hard and Private Money Lenders

[Tim Crosby]

Ok, so good news first! I've recently been in touch with someone who's willing to fund about 50% of the purchase price of my next investment property! It's great, but it also leaves a significant portion of the deal unfunded. Ideally, he would just give me that money and I could go to another lender and say, "Hey, I've got this money, let's do business!" Unfortunately, I don't think it's going to be all that simple.

I really need to ask my guy what his terms would be. When we showed him the property I was looking at, he basically just threw out a number he would be willing to put forward and then some basic terms for interest rates and points. There was never any discussion on how that money should be used or whether or not he was to have a lien position, or any of that. I know, I need to clarify that with him..

I just got off the phone with another Hard Money Lender. During our conversation I asked what he thought about someone else funding a large part of the purchase price and he said something to the effect of, "well, as long as he doesn't want a lien position, we don't really mind." 

What should I do? I know I need to talk to the Private Money guy and see exactly what his terms are, but is this typically the situation? I've heard that you can use Hard Money to fund the majority of a deal and use Private Money to fund the remainder. I know the PML is going to want some security, is there some other way to offer that? When it comes to the HMLs, are there companies that don't mind another investor being involved? How is that usually resolved? How do you determine who get's first and second position? How can I structure this so that everyone is protected and we can get this deal 100% funded, with nothing coming from me! That'd be the ideal situation for me!!