As for hard money lenders, they typically require you to have skin in the game, especially when it’s your first investment.

People need skin in the game. 

They have skin in the game, but are almost fully retired and don't want to deal with anything property management related.

Regarding the cash reserves- It's not about using all your reserves but you must some skin in the game.

If you, for instance, already have purchased the land and building thus you have significant skin in the game then I am sure your 2 million will stretch pretty far and you could get a sizable loan to help complete your project.  

We skim coated the basement walls because they were textured.

I have skin in the game for 5 years now and in the last 2 years i feel i mastered it.

Most of them, however, want you to have skin in the game, so if you don't have enough for the down payment, look for someone you know to partner up with. 

My partner and I are looking into purchasing a multifamily building (6 unit) in Hartford, CT and trying to come up with some creative ways to put the least amount out of pocket into this deal and still make it a win-win for the seller and us.One of the things we are exploring is having the seller finance the down payment (20-25%), but not sure how to go about it as I have been told that lenders would not allow the seller to put the down payment (a 20% mtg to the seller and 80% mtg to the lender... essentially us not putting any money or "skin in the game").

It never hurts to try and get some skin back from the seller on inspection items.