If you have a good credit history and 25% cash down and sufficient income obtaining conventional financing for up to four houses is actually very easy.If you don't have the above requirements, then you scramble to put together any deal until you have proven success and proven track record with which to attract private financing partners.Hard money borrowing eliminates many otherwise profitable transactions since the profitability needs to be much higher to pay the hard money rates.The hurdle with conventional financing is about 5%.  

Maybe you could borrow the money from him with interest but not tie it to the real estate deal.

But a good lender will want to invest in you the borrow for a longterm relationship. 

My rough numbers165,000 under contract10,000 borrowing cost15,000 rehab10,000 Closing/taxes/etcExit 240,000Less closing fees223,000Less all in200000Potential 23,000 profit....Again this is super clean compared to the other projects we do, and typically the spread is better because of all of the work involved....

Borrower had done a debt consolidation loan with Citi secured as a second on the property.

My own brother, who lives in a mobile home park and borrowed money from our mother to buy his home, once said it was because of my friends that I have it so easy.

The FHA gets a 1.75% fee tacked onto the front of your loan (100k borrowed becomes 101.75k loan).  

Even though an all cash offer is lower it screams CERTAINTY OF CLOSE versus the risk of underwriting a borrower for a loan and the deal falls apart.It depends on how long you want to wait before you can refi out if that strategy works for you or not.What is your particular strategy for buying the smaller rental houses versus other assets classes if you have that kind of capital to work with??

After all you're borrowing that money from yourself.   

You'd think that a deceased borrower on an upside down property would be enough motivation for a lender to work the short sale.