Need Help with Private Money Logistics; Newbie

[Ryan Perrone]

I own a popular weekly rental in the northeast, and I'm looking to buy in Charleston right now.  Real estate investing isn't something i'm doing as a serious form of income generation right now, but I'll be slowly growing my portfolio as we travel around.  

Okay so here's the situation -   I own a bunch of businesses, no W2 income, just K1's , 1099s and the like.  I don't look the best on paper for traditional lending.  I have access to private money but prior to tapping it I want to fully understand how to go about this in a way that is respectful to my friends,  simple and organized.

1)  The house I'm looking at is $560,000 ;   With my credit score being a mess, should I just borrow the 20% down payment ($112,000) ? Will a traditional bank work with me regardless of credit score with 20% down?  Or would I be better off just borrowing the full 560,000 from private money - is traditional lenders not even possible with a bad credit score right now?

2) Assuming I go private for the full amount,  how do I structure this?  Promissory note and he has 1st in line on the property?  Close friends, never have done real estate before,  what interest rate would you think is fair to him, and good for me, assuming ~4% is current 30 yr fixed?

3) Say 3 years in I want to refi to a traditional lender from my private note;  is that a typical practice? 

Like I said, completely new to this, but trying to get my ducks in a row. I fully understand I may not have a grasp on all of the logistics, so any help is greatly appreciated.

Thank you