Should I go HELOC, hard money, or some other vehicle?

[Lem Diaz]

I'm looking to buy a 2nd property which will become my primary residence (SFH or Duplex). Here's where I'm at with my primary residence:

Appraised value: $1.189M

Loan balance: $574k

My question to BP folks is what are my best financing options to purchase this next property. The likely purchase range in my area for things we're looking at is between $550k and $800k. The ARV (rehab cost of ~20k) on them is 700k for the low end ones and about 875k for the high end one. The deals I'm trying to get into are off market and require all cash offers. This leaves me in a bit of a bind as I only have about $200k in liquid cash right now. From my limited knowledge I understand my options to be as follows:

1. Heloc on PROP1 to pay in full for PROP2. 

a) Limits my purchasing power to the low end of my range based on 60% LTV on the equity (Wells Fargo) [(1.189M - 574k)*0.60 = $369k --> $369k + $200k = $569k of all cash purchasing power].

b) I'm not entirely clear on the restrictions of refinancing PROP1 or PROP2 after everything closes. If anyone could shed light on this I would greatly appreciate it.

2. Hard Money Loan

*a) New to this form of lending, but my understanding is that I use PROP1 as collateral for a hard money loan.  Will a hard money lender take 2nd position to a bank mortgage with that much equity as collateral?  What is "industry standard" for these types of hard money loans?  2-3 points and 10% interest or something along those lines? Will it be difficult to refinance PROP2 to a traditional mortgage and pull enough money out to pay down the HELOC to zero?

3. Financing options that I'm not thinking of or aware of...

There are a lot of questions baked in there, but hopefully that give enough of a sense of my situation to elicit some good discussion/advice.