2nd pos (gap funding) on REOs

[Daria B.]

Hi -

I'm looking for structure from those who have done this - provided (gap fund) funds for an investment (REO) where the initial funds were supplied by another investor. As the person supplying the "gap", so to speak, it seems to be typical that 2nd pos is where the gap funder sits. I don't think both can be 1st pos.

How have others (you) structured this in terms of security? Meaning, it's lending money (gap) and being in a 2nd pos so how can one determine if it's a good viable position to be in. What secures the 2nd? Not sure how else to word it or what else to ask.

I've done 1st before and was 1st and only on deed but as 2nds go, not sure what is being secured or secures the money being lent. Also, a twist is that the money will be from a SDIRA, for whom I have already put in an email to for finding out their requirements on 2nds, if any.

Thank you