Over the years, my private lenders always had what I referred to as “remnant money.” Meaning, I had put most of their money to work on a one-to-one basis but often they had an extra $25,000 or so laying around that wasn’t enough to fund one whole residential (1-4 unit) deal.

Whenever I mentioned the subject of putting two lenders together, the issue that always came up was “who’s going to be in first position?” or more like “I’m not going to be in 2nd position!”

Well, I mentioned this to a friend of mine in California and he mentioned the fractionalized trust deed. This trust deed allows up to 10 lenders all with individual promissory notes to be in 1st lien position on one residential deal.  Here’s a sample…

Now, this is provided as a sample only! I’m not an attorney and you’ll need to check with your own real estate attorney and the SEC to see what the rules are about using it in your state but it’s a pretty cool concept and really simple to do.