Need Clarification...Can you do this? HML & MONEY

[Tyler Piciullo]

Let's say I found a deal. Hard Money Lender is requesting 20% down and will finance 80% of purchase price and 100% of the rehab. When it comes to the 20%, I heard that the HML wants to always stay in the first position and pretty much would like to be the only lien on the property. If I were to raise the 20% from friends & family with promissory notes guaranteed by the LLC is this possible?

[Jay Hinrichs]

sure.. if they are unsecured loans..  Most HML dont care where the equity comes from just that there is some equity.  Also check to see if you have to pay all the closing costs and points up front that can make your down payment go up by 5 to 10% . so you really need 25 to 30% down and then for draws.. Most will only let you draw for work in place after inspection.. So normally you need to front the rehab and get reimbursed so this can be another 10 to 30k per draw you need in cash ..