Deed of Trust and Note for Private Lender?

[Pat Arneson]

I have an opportunity to raise capital with a private individual at a flat interest-only rate as a way to reduce interest charges and eliminate origination and service fees. I'm looking for ways I can "protect" this private lender. 

In theory, this is what I'm proposing -- I'll fund 20% and cover closing and rehab costs. Private lender will wire ~80% to my business bank account shortly before close. In essence, it is a cash offer. I am assuming I can write the offer as cash, so long as the private funding is guaranteed otherwise I may put my EMD at risk. For non-auction properties, I'm assuming the title company can draft the deed of trust and promissory note and record at close? After all, most lenders just use the standard Fannie Mae template... For auction properties, I'm assuming once I purchase a property I can draft and record the deed of trust following recordation of the conveyance?

Then, upon resale, does this private lender simply inform the title company of the payoff?

Is there anything I'm missing?

Thanks!

[Jay Hinrichs]

Quote from @Pat Arneson:

Quote from @Amir Khan:

@Pat Arneson I agree with Mitch, to provide protection and trust from your PML, you need to have his/her funds go to the title company and in escrow prior to closing (instead of coming into your bank account). Another important thing not mentioned is that you need to list your lender as "additional insured" on your insurance policy. 

Thanks Amir! I like that idea -- This should work for most properties except in person auctions. I'm wondering if it will work for online auctions. I assume it should...

Ok this is how you do it for court house steps.. the investor provides your cashiers checks. some will charge you to use them like 250.00 or something.. if you dont win you simply bring the checks back and give them to the bank and your out 250.00 or they dont charge you at all.
then when you win the bid to secure the lender you simply have the trustee's receipt name your lender as the buyer.. so he is secrured the deed comes back in his name then you simply reverse the ownership and record a mortgage.. U can have the receipt in yours and his name as well but this is how I have done it when I am giving money for auctions.