They have said that it would be different if I lived on-site.One bank also said that for a line of credit, they would only consider purchase price + actual cost of renovations for  determination of value. 

How much are you planning to borrow and will the new actual income adequately service that debt.

Also strongly suggest making a stop in the Telluride area if you've never been.In terms of property, you'll find an endless supply of small farm towns in that whole corner of the state you could use as a base - for the actual investing, there's not that many larger markets - Grand Junction, Durango, the I-70 corridor.

Just like I refer borrowers all the time to the top HML companies that I know wont rip people off .. and don't take up front money and actually fund the deals .. of course you need 20% down.. but if your in mid west that is usually 10 to 20k maybe 30 to 40k.. and frankly if you do not have that amount of liquidity plus reserves the last thing you should be doing I trying to flip houses... 

FWIW, the approach being shown to me in this deal isn't that of a hard money loan, but creating a new LLC to close on the property (wants to close in  a week actually)  that will have several individuals owning a share in this LLC proportionate to their capital stake.   

This property is actually in iowa. 

They both speak in reality... not just in the awesomeness of REI(it is awesome, by the way). 

I am actually attending a 3 day seminar on REI next weekend.  

The property is actually 2 lots. 

If you don't want to disclose the source, that's fine; I'm actually specifically interested in knowing if your source provides you with details about the private note itself.