If I prepaid 6 months of payments in advance (and negotiated a prepayment discount), I could establish a little bit of a track record up front.  

Your lender should be giving you an estimation of lender, title, closing, and prepaid fees.  

Therefore, any prepaid fundsheld to secure future rents are considered to be a part of the security deposit.

Points are pre paid interest and do not apply to loans funded by equity, nor can a PPP be effective with an equity based loan.....seller financing. 

I ask because we are in the process of a cash out refi on an investment property with closing costs of about $2400(I exclude prepaid interest and funds for an escrow account).  

You may have to escow the prepaid rent payment. check local laws.

You have mortgage insurance prepaid (with I believe is 1.75%) and things like insurance & taxed prepaids, survey costs, documentation costs, and other prepaids.  

One problem with the conventional mortgage route was I'd be paying about 50% of my borrowed amount up front (down payment + fees + prepaids), and, while I understand the 25% down payment, an additional 10% in fees+prepaids seems a bit excessive.What I know of my options:Conventional mortgage that closes before the cash offer closes. 

Instead of collecting rent later, give the seller a short-term pre-paid lease as your down payment.

Fixed for 5 years and a reasonable probably of 10% appreciation during that 5 years means it's almost certain you will refinance into one of our traditional mortgages, meaning they've got to beat you up early on prepaid interest... which is what discount points more or less are.