Securing a new construction deal..ideas?

[Archie Minkowski]

I flip houses with a high net worth investor; he's the money guy and I manage the projects.  We had a new deal pop up recently and I'd appreciate your brain power.  

We were approached by a homeowner who has a small SFH on a one acre lot in a very desirable area of town. He has approved plans to knock down the old house and build two luxury homes on the lot. To be clear he has drawings, city approvals, etc. He also has a construction loan approved for 80% or $800,000. He will live in one house and sell the other and likely clear $400K or so. He needs $200K gap funding to close the deal and has proposed my guy put up the funds in exchange for a 20% ROI.

This means the bank will have a first lien on $800K on the deal and my guy will have a second lien on the $200K.  In my opinion this is a terrible deal for my guy because the second is worthless if the deal goes south and the bank sells the houses to recoup their money.  

Is there a way to secure my guy's gap funding, other than a lien?