Hard Money, Immediate refi

[Siyavash Fooladian]

I had a question about all cash offers and immediate refi. There is a multifamily property that I am looking to creatively finance to maximize CoC return. The 2 out of 4 units are m2m and the other two have leases in place until 5/31/2021. All rents are below market value. My goal would be to purchase property, increase the rent on the m2m leases. If they choose to leave, I will rehab the two units and list for market value rents.

This would be one of my first rental investments. List price is $125,000 as is and has been on the market for 30 days. If I were to do a cash offer of let's say $100,000 and do an immediate refi to pay back a hard money lender (a friend) and recoup my initial investment and the property appraised at the $125,000, I would have 20% equity in the property already, would have CoC of 12% without even raising rent or rehabbing units (I included $16K for rehab costs, and included hard money lender points at 3 points for the loan and immediate refi and repayment of loan).

I would appreciate any thoughts on this strategy. Would it restrict my ability to refi the property in 6-12 months when I have empty units to rehab and increase appreciation of the property?