You could simply make extra payments each month to pay down the line of credit which would increase your cash flow.In my view, this isn't a bad option and I'd probably do it - you can always refinance the property to a traditional mortgage later on down the road. 

If you are looking for financing (traditional) the collateral will be the house itself that you are buying.

Shwat...As someone in medicine, the grass is not greener. 

He was already clearing 4000 a month easily He said to come back to him with traditional financing.What are the ways i could make this deal work, was my offer not enticing enough , was the terms too low.

I'd put it into an index fund, reinvesting the profits, and in 5 years, start living off the profits, retired early, letting my traditional retirement funds grow until eligible age and add those disbursements to my income. 

Instead of working with larger more traditional lenders, I thought building a longterm partnership with a smaller local bank would help build my empire faster and more efficiently.

I'm just pointing out that you're making an observation on traditional multiplexes whereas the original poster is talking about simply adding an ADU to the house. 

Do you think it is smart to take the hard money lender route until a traditional bank could pick up the remainder of my loan? 

@Darren LookerOne of the easiest ways to slash your tax bill is to pump money into a traditional IRA or 401(k).

Furthermore these skills cannot be proven in a traditional interview process.