Hard Money Question!
Hey guys, I'm about to make a purchase on a local house. I'm using hard money to buy this property, and they only cover 70% of the purchase, so I'm going to have to cover $14,000 of the purchase out of pocket. Now I don't have $14 grand I can just throw at this thing, but I do know another hard money lender (I know this guy personally from a local REIA, so this isn't a company like the one I'm using to cover the bulk of the purchase price) that will very likely be interested in covering that amount.
My question is: How does the 2nd lender (for the $14k) protect their interest if the property is already being used as collateral for the 1st lender? I mean, I wouldn't even want the property to BE collateral for only $14,000. So I'm not really understanding this from a technical perspective, I guess. How does the 2nd lender assure they'll be repaid? There'll be plenty leftover between the purchase price and sale price to pay both lenders back plus interest, but I'm just not quite understanding where the 2nd lender can rely on being paid back if I'm not able to resell the property within the 1st hard money lender's term (8-months). Just so you know, the only reason I would ever think it might not sell within this time frame is because there's a tenant in it with about 9-10 months left on their lease. So if I can't convince the tenant to move out upon sale of the property (within their allowed time), I would need to find a buyer that is willing to wait out the lease agreement, which I'm honestly not sure if most buyers are or are not willing to do.
Anybody understand or have experience with this sort of thing? Please help!
Thank you very much in advance!