Are you sure you can't reduce the improvement budget and still offer an desirable product?

The only downside I see with the LOC is that it can be frozen by your lender or reduced as they see fit.

In 2012 did FHA reduce it to 3% of loan amount or 6K maximum?

The annual income may have been reduced, but I was still in a huge positive cash flow position with a huge return.One of my mentors once told me that if I have $1,000 to invest, invest only $500.

This reduces the risk.My method of considering a real estate investment and determining the value is far different.

If the final Risk vs ROI is acceptable to you and you are in a position to pay the Financing and Carrying costs out of pocket, I wouldn't let the hard money issue stop you.Incidentally, if you can get the owner to sell to you via a Wraparound Mortgage, you can significantly reduce the amount of hard money you'd need to obtain, improving your profits.Incidentally #2: Some HML's impose penalties if you carry the loan for longer than six months.

Buying well and being flexible on the exit strategy can reduce the risk, but you bet your @** that there's still risk in the deal.

Actually I would try to get most/all of what the cost is going to be in a credit since knocking the cost down $10K will do what, maybe reduce your payment by like $50/month, but you still need to have $10K cash to pay for the work.

Then, after they have incurred unplanned holding costs, they are having to reduce the price and further slashing their margins.Be smart.  

I could see prefab being used for many SFR to reduce prices but it probably requires more competition.