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.

"The new loan amount can be no more than the actual documented amount of the borrower's initial investment in purchasing the property plus the financing of closing costs, prepaid fees, and points on the new mortgage loan (subject to the maximum LTV, CLTV, and HCLTV ratios for the cash-out transaction based on the current appraised value).

To clarify, I'm asking how the prepaid rent would be transferred to the new landlord.

Yes prepaid taxes & insurance is the normal practice.

Disclaimer: I work for a rent payment serviceHi @Vitaliy Volpov , for the tenants that don't have a bank account we recommend they get a prepaid card that allows ACH debits, such as NetSpend, and they can use that like a bank account with an online payment service.  

I like the idea of a short term lease if it is entirely pre paid and with a firm date of departure.No more than 90 days,don't let them get lazy and comfortable.