I didn't realize that the investor would get a piece of sale so that changes things (and why I posted here to try to flush things out). In my opinion, I think you would get better results by disclosing purchase price, expected monthly rent receipts, and precisely how long you expect to need the money. From there I think a PML might be better able to determine what is fair and what is needed. Projecting future ARV is tricky at best; determining value based on income and total investment is a little more straight forward IMO.
Personally I am not looking for >6 month projects. With that said, to be in 2nd position on a home that is fully leveraged (minus upgrades) I would think a PML would want to net 13-15% APY for this to make sense. You might try an 8% note with an equity share but I think you should cap the term at 2-3 years. Once you have the term, purchase price, and expected rent you can back your way into 13-15% return to PML. With that said, be careful about marketing hypothetical returns because of compliance & regs. The 8% locks in 'something' for the PML and equity share will be icing on the cake.
Sounds like a great project. Maybe we'll rent from you if daughter decides to become a Wolverine in fall 2015.
