Cash vs. Hard money vs. What else?

[Nick B.]

Hello All!

What is the best way to structure the following rental property deal (all numbers are hypothetical)?:

Purchase price - $70K
Rehab - $20K
Closing costs - $3K
ARV - $120K

Option #1: pay $93K in cash, complete the rehab, and then refinance with a conventional loan at 75% LTV of ARV or $90K.

Option #2: get a hard money loan for $83K (70% or ARV), complete the rehab, and refinance with a bank recommended by a HM lender.

#2 would cost at least $5000 more because of 4% points on HM loan in addition to 8% rate. The loan is for 3 months and if I annualize points the effective annual rate is 24%! I can get a better loan from a credit card.

Questions:

How soon can I refinance if I buy with cash? Someone told me that I have to wait for a year if I want to get refinanced based on ARV.

Yet a hard money lender representative stated that IF a loan was from them I could refinance immediately after the rehab using "their" bank. From "their" bank perspective it would look like a purchase at the ARV price and not a re-finance.

So, what are the refinance rules in this case? Are they bank-dependent?

Are there banks that would loan based on ARV shortly after rehab?

Are there HM lenders that charge a straight rate and no points, fees, etc.?

Thanks

Nick