Bigger discount rate (60-75% of note principal balance) will apply to notes that are: new note, no payment history, low interest rate under 7-8%, long term (over 15 years), paperwork issues (dod frank compliance for ex.), undesirable markets, long foreclosure states, and few others. 

That will come naturally if he sees interest or offers up alternative ideas.  

Accept mediocrity only if the alternative is disaster. 

In general, a lower cap rate indicates there is less risk associated with the investment (due to increased demand) and a higher cap rates can be associated with higher risk alternatives."

@Blair Boan I do not have an answer to your question of which choice you should make, rather I would like to persuade you to an alternative path.  

The bank that owns my mortgage will not do a HELOC in my state so I'm looking at the best alternative. 

Others will suggest alternate paths but all require more work and more time.

Hi Everyone,I am looking for some possible alternatives on paying back a private money lender.

Too often I have seen the true cost blurred by tax credit and other financial perks.Hence why energy efficiency was being encouraged over alternate energy generation above.  

I not by any means an expert, but I would suggest having alternative outs planned for anything you might buy for a student rental in case a project doesn't pan out.I've recently found the Tallahassee Investors Network and those guys put together a great gathering once a month that I'd highly recommend you make the trip over for.