I would bet he would be willing to pay more for the place because of his past and knows how hard its to find a place. 

My question is should I go with a conventional loan up front using my cash and little bit of HELOC for the downpayment, then renovate, and refinance OR should I use a hard money loan and/or some of the HELOC to do the same thing, renovate, and refinance?

That's hard to say from the information provided as we don't know your whole financial picture. 

This is the hard part because not many agents invest in property.  

I also found it hard to invest in NYC and as a result an out of state investor.

Does anyone have a recommendation for hard money lenders in NC?

Plenty of resources from agents, lenders (institutional, private and hard money), contractors, wholesalers, etc.

Could be the sellers are hiding something and could be they are just hard headed. 

Now for an entry level investor is hard.

I'm all for looking on the bright side but my philosophy is that I make money when I buy the property not put in 3-4 months of hard work just to break even.