@John MoonGiven the information above, I believe you have two good options: 1) Finance all three separately on conventional, FHA financing (under 4 units)2) Approach a local bank on the deal.

That would be them having less equity than a conventional mortgage.

I would have to spend roughly 5k to get it ready to rent after that and then would refinance it to a conventional 30 year mortgage with 20% down.

Any opportunites to add value like storage space you could charge for, pass the heat or sewer costs on to the tennants, are rents below market? 

I have found some bookkeepers charging over $60 (not accountants).  

As an example, an FHA buyer needing closing cost help has no chance of covering the difference between contract price and appraiser price, so if I’m the sellers realtor I’m telling my sellers there is no way this buyer can make up the difference should appraisal come in low.Whereas a cash buyer or a conventional buyer who is asking for zero help with closing costs and putting 10-20% down (or all cash) is in a position where they could afford to cover the difference between contract price and appraisal price.

3) Say, I owe him $2000, if and when I pay him upon him putting the lien, how much would I have to repay - I mean, what kind of interest is charged ?

And if I get 24 months interest only payment on the private money loan, 2 years from now I should be able to refinance the loan into a conventional one, given that I'm getting a good deal on my property.

On the flip side, qualifying for conventional loan would get tougher with rising rates and cash flowing might be tough if rents doesn't rise enough to negate the increase in interest rates.Want to know what others are thinking.Thanks,Steve

Or did you mean refi into owner occ conventional and minimize/eliminate MI and then stay there a little longer then move out?