So I'll first lay out the basics of the deal... and then pose my quandary..... that felt like an elegant sentence lol. 

2 unit building near major medical/college campus'

Last 5 sales on street for similar properties- 350k, 350k, 450k, 405k, 505k

ARV- we'll say 400k

Seller Finance Terms

Term Length-5 years, with option to extend 2 more years at 2% higher, 1st yr int only

Purchase- 235k

Down Payment- 15k

Needs: 85k in rehab-mostly exterior and some cosmetic inside

Tenants currently pay $950(two bed 1 bath) and $740(two beds one bath)-- 

The owner doesn't use 3 bed rooms upstairs-- he used them for storage. He also didn't utilize the 1/2 in the ground basement that has two rooms and a bathroom. 

Once I have the tenants out--they'll be out Sept 1, our plan is make the top 2 floors a 5 bed 2 bath unit-- should rent for $2,500/mo. Then once we fix the basement bedrooms... we can make the first floor and basement a 4 bed 2 bath unit, will rent for $2000/mo. 

So my PITI on this after the first year will be around $2,000/mo


Capex/Rep- it should be like a new house at the end, so I'm only factoring 5%/mo-$225

Vacancy-$0, I've got six other properties in the neighborhood... no vacancy with college kids


Estimated Cashflow/mo- $1860

21% CoC Return

My question is this...... my original plan was to utilize the friendly financing terms at a 4% int rt-- better than my recent bank loans by a good margin....I was going to use the full 5 year term, and fix it up slowly over time... get the good unit rented out for max value, and get other unit updated to do the same..... then work on the big ticket items throughout the course of the term...... but then I got to thinking..... interest rates aren't getting any lower.... with the market hot... the ARV and appraisals will likely be friendlier the faster I do it.... it seems a downturn is due well within that 5 year term. I don't have 85k in the bank... I think I could finance it via some credit cards, Lending club products, etc... but I'd definitely be more comfortable paying for the updates with the cashflow over time.... This was a little scatterbrained but thanks for reading and any advice on how to best proceed would be much appreciated.