If you can get a bank loan, then that would be your cheapest money source. 

The one thing we do know is that if the client says "No I didn't have any intent of investment" - or "my intent was solely appreciation while i was using it" then the 1031 will not fly if challenged.Spread the word - there's no such thing as a second home. 

Never base a deal solely on the hope that there will be appreciation.

If he's telling you this before he starts work I'd give him the benefit of the doubt that it's a misunderstanding and I'd consider his new price.I don't know enough details to give you advice but based solely on what you've said I would stop everything until this gets worked out.  

Since I do this full time and it's my main source of Capital to support my Family (Wife & 2 Kids).

You could always just open up another personal account and just use that solely for your rental. 

If your property is 4 or less units, it is solely based on comparable sales. 

You can bring in cash from any source. 

We have a variety of sources for 30 year money. 

Perhaps if you are handy and with a little search time on the internet tapping various sources you could do it yourself.