Hard money and then either conforming or portfolio is good if you bought it right. 

It is not a red flag to have a residential, commercial private, or conforming 2nd home loan on your 1031 property. 

Conforming doesn't work if a borrower owns too many financed properties, debt to income ratio doesn't work or non-warrantable condos. 

[Link Removed by Moderators]As Nicholas mentioned, the lower-equity options are probably going to be construction loans; "renovation loans" may have better terms, since they're conforming single-close residential mortgages (Fannie's HomeStyle or Freddie's equivalent, ChoiceRenovation). 

We always suggest borrowers get as many conforming/conventional loans that they can before they make the leap. 

As Anthony noted, ensuring you meet the lead conformance is important. 

Just did that on a $725k non-conforming duplex in Denver and was able to take a nice chunk of cash out at the sale. 

Google town name + ordinances to find online copy.Once you are reasonably sure it would be a conforming use, go talk to your city.

@Holly BarrettNot sure if your questioned was answered, but I believe the conforming loan regulations allow for the "expected rent schedule" to be used when calculating the expected income from rent. 

I currently have financing in place, so I definitely will ask for the loan to be adjusted to conform to 203k standards compared to the normal FHA loan.