Posted by erick on May 20, 2006 at 17:24:57:
I just went through this type of situation. Mine was an 8 plex. I put down 10%, owner carried about 12% and our hard money man carried just under 65% of the deal. THis situation got me into the property because, at the time, I didnt have the 25% to go conforming. And wouldnt you know it, a major part of setting up this deal was “who” was going to be in second. Naturally both wanted to be first, but in the end the seller took second because the hard money guy and him spoke together and reassured each other.
But typically, the person/lender putting up the most cash gets first. Its mine belief, and Im sure your seller knows, there are many ways to swindle a second postion, so its a risky thing. Maybe you could make it worth his while to get him to go second?
I would not recommend this approach to getting into bigger deals because in the long run you eventually will HAVE to buy the second out (somehow). So watch out for short balloons on the second - set the whole deal up as if it is for the long haul!