Securing a loan for rehab expenses

[Doug Woodward]

We have a flip property that we close on this Friday.

ARV (by Subject To Repair Appraisal) = $440K

Purchase Price = $230K

Repair Estimate = $100K 

We have secured private money to take the property down @ 10% and no points, but this is the first time that we have used this investor and when we met him and his wife for lunch today, he asked if we would be supplying the cash for the repairs.  

For a variety of reasons (we are set to close in two days, we have not yet proven ourselves to this investor, etc.), I quickly responded that we could and he responded with that is what they would prefer, which I totally respect.

This is our 4th flip and we have not used any of our own money for purchase or repairs.  We have only used private money to finance 100% of our previous deals.

We do have the ability to fund the rehab, but philosophically it is not our preference to tie up that much cash, for what in this case will be a longer rehab.

We also have the ability to raise the $100K from either another source 100% or a few different sources participating with $50K a piece.

My question is this -- since we have previously raised all of the funds used on a project from a single source, we have been able to secure their investment with a first lien/ deed of trust.  In this case, the first lien will be held by the investor supplying the acquisition funds -- so what sort of security could I offer the investor(s) who would be willing to provide the $100K rehab funds?

I have some ideas, but I would rather hear from someone who has dealt with this successfully previously.   

Best Regards,

DW