@Luke H.Hi Luke,  As a private money lender myself I will focus on one element of your deal---5 years is a long time to be finally paid. 

Actually the IRS does not tell us what we can invest in, only what is disallowed (life insurance contracts and collectibles).Allowable investments for SDIRA investing include the following:Residential real estate, including: apartments, single family homes, and duplexesCommercial real estate Undeveloped or raw landREITs (Real Estate Investment Trusts)Real estate notes (mortgages and deeds of trusts)Promissory notes Private limited partnerships, limited liability companies, and C corporationsTax lien certificatesOil and gas investmentsPrivate stock offerings, private placementsJudgments/structured settlementsGold bullion Factoring investments

You can also do this on a refinance.Else, you can find private money, take out a HELOC if you have a lot of equity, go hard money and then refinance after, or see if your preferred builder offers financing.

I included stats on percent unleveraged purchases and that many of those fairly low percent cash purchases in fact use unseen leverage HML, private lending, etc and some are short term cash holds such as a flip or a brrrr that gets financed not long after purchase.  

And if your investor friend’s private loan helps fill in any gaps, it might be worth considering that short-term pain for long-term stability.What do you think you’d focus on first... paying off that line of credit as fast as possible or jumpstarting the renovation to boost cash flow right away? 

@Jay Hinrichs“this seems like a mini private mutual fund..

However, I got into real estate mostly relying on OPM - private lenders, seller financing, and business lines of credit.I also don’t like the idea of buying turnkey properties at a premium.

The duplex has done well because it has a great backyard/garden area and each unit has a private deck and W/D.

I will charge a rent of $850 for the other 2 rooms and $1,100 for the basement (because it's more private with it's own bathroom).

There are two sides to every transaction: private and public..