It could be anyone... a 1st position lender, a 2nd position lender, an HOA suing for their HOA fees, a 3rd party where a borrower pledged their house as collateral on a contract, etc, etc.The biggest thing to know is that senior positions survive less senior positions.  

You could also explore cross-collateralization using existing equity..

Buy Solid, Paid-Off MultifamilyYour idea to buy a quality 8-plex or a portfolio of duplexes debt-free is smart, especially if:* You want predictable cash flow,* You’re risk-averse with this large windfall,* And you want to access equity later via a line of credit instead of starting with leverage.With paid-off multifamily, you’d have:* Stable monthly income* No debt pressure during downturns* Plenty of collateral to pull a LOC (Line of Credit) later for flips or BRRRRs  This is exactly the kind of “calm foundation” approach that can free you to do more creative investing without risking the farm.3.

We can lend on this property given the AS IS Value, or use other properties as collateral, we just require to be first position and has to be held in an LLC.

The lender's policy will protect your interests as the lender in the collateral.

Your numbers seem solid, and a DSCR loan is a good fit for this kind of deal since it focuses on the property's income, not your personal DTI.For the down payment, using a private lender, partner, or equity investor is usually more sustainable than a hard money or business loan lenders often frown on borrowed down payments unless properly disclosed and backed by collateral.

The note is tied to house A.Numbers:House A: $400kHouse B: $525kDebt: $450KLet me know what you think.If the lender won’t accept a partial payoff to release collateral (one house) then you’ll have to payoff the entire balance at the time of sale.  

I can't think of anything riskier than taking a HELOC out of your primary home and using that to make super aggressive loans that are unsecured.if you want to make aggressive loans and arbitrage that against the higher yielding loans, at least make loans that are collateralized.

These can be structured with no prepayment penalty and draw-as-needed flexibility, which sounds like what you're looking for.If your rental income is solid and you have strong equity, you may also consider a blanket loan or cross-collateralization to tap multiple properties for one flexible facility.

The second is actually to qualify for a new financing by using the cash value in the policy as collateral.