2nd Lien Position for Down Payment on Hard Money Loans

Hartford, Connecticut
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2nd Lien Position for Down Payment on Hard Money Loans

Justin M. PillionPro Member
Member since 2025 · 8 posts · 3 votes

Hi BP community, 

I am wondering how many of you are able to structure the 2nd lien position from Private Money Lending used to pay for the down payment on a Hard Money Lending Loan. 

Do all HM Lenders allow this?

If not, which ones are you aware of that do?

How is it structured? Specific language used in Contract? Can anyone provide an example?

I see many people on the internet that claim they do this. Part of the whole "Invest with none of your own money" series of videos. I'm sure this is something that can be done, but is it more of a hurdle and rarity to have this be a realistic investment strategy or can this be done from the beginning of the investment journey?

Thank you, 

Justin

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  • Samuel Eddinger
    Meriden, CT · Member since 2018 · 702 posts · 501 votes
    9mo
    Quote from @Justin M. Pillion:

    Hi BP community, 

    I am wondering how many of you are able to structure the 2nd lien position from Private Money Lending used to pay for the down payment on a Hard Money Lending Loan. 

    Do all HM Lenders allow this?

    If not, which ones are you aware of that do?

    How is it structured? Specific language used in Contract? Can anyone provide an example?

    I see many people on the internet that claim they do this. Part of the whole "Invest with none of your own money" series of videos. I'm sure this is something that can be done, but is it more of a hurdle and rarity to have this be a realistic investment strategy or can this be done from the beginning of the investment journey?

    Thank you, 

    Justin

    Hey Justin.  I partner on flips with a buddy of mine.  I have good credit and good assets to use in a personal guarantee for the hard money lender.  I also have my own money to use as the down payment.  In this case, my partner does all the work without paying anything.  In this way, I use my money as a way to get into the deal.  I only do this with him but if you find someone that wants to get into the game and believes in you, it can be done.
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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    9mo
    Quote from @Justin M. Pillion:

    Hi BP community, 

    I am wondering how many of you are able to structure the 2nd lien position from Private Money Lending used to pay for the down payment on a Hard Money Lending Loan. 

    Do all HM Lenders allow this?

    If not, which ones are you aware of that do?

    How is it structured? Specific language used in Contract? Can anyone provide an example?

    I see many people on the internet that claim they do this. Part of the whole "Invest with none of your own money" series of videos. I'm sure this is something that can be done, but is it more of a hurdle and rarity to have this be a realistic investment strategy or can this be done from the beginning of the investment journey?

    Thank you, 

    Justin


     If its a company/institution they will not allow it. If it is an individual using their own money maybe they will allow it. As you mention many claim they "do this" but many claim to operate legit daycare centers in minnesota as well. Its easy for anyone to say anything on the internet, the reality is it is very infrequent and those that may get it done have $1M in equity in other properties. If you have no money, no savings, no history of doing this, I would tell you the odds are better to hit powerball - and your focus should be on working your tail off at one or multiple jobs to save the money so you have the money for the downpayment. 

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