No real rule of thumb to say a discount will be X%, depends on many factors.I agree with Wayne that you'd be better off with private money, problem is they are usually short term, but there are some little old ladies that would love to get 8/9% for 10 years for the grandkids, but that has other issues too.Now, if you're buying a 100K property for 70K you might do a 90K loan and you may get the 70K, the trick is not to go over the market value of the property and show that you have skin in the game or compensate for the skin like a pledge of other assets.

The HML will want some skin, plus you'll likely need cash to cover the first round of rehab, pay interest during the loan term, maybe pay points up front, cover utilities and insurance until the property is sold, and possibly cover rehab cost overruns.

Your client needs some serious skin in the game if your credit is on the line.

That being said they will want you to have some skin in the game.

Hard money "asset based" lenders still require that you have skin in the game.

You must have skin thick enough to deal with that and not sweat the small stuff.

If 40% is what it takes to get the capital, that's fine, but in my opinion that's pretty rich to the money source when you have 50% skin in the game.

It also allows him to get his refinance ready to take you out as part of the refinance so he isn't coming out of pocket for that.For him you are keeping some skin in the game when you initially rent it so that he knows you are placing a quality tenant(even though you would anyway that's what I would tell him).

However there are more than one way to skin this cat.

How is the tenant going to know that it isn't your crazy uncle or your sister-in-law that you've sent their way to give you a glowing review?