I'm not familiar with California law (Assuming that is where you're located), but you may also want to include them on the lease, I had a similar situation with a tenant in Ohio where the parents prepaid rent, my attorney recommended including the parents on the lease vs just as cosigners.

I haven't done a refinance yet but I can talk about the closing costs of my first deal (which I bought with a conventional 30 year loan):Underwriting fees: 600Appraisal: 675Title Fees: 1650Recording Fees: 150One year of insurance prepaid: 600Initial Escrow payment: 400So overall, I paid about 4k for closing costs as well, but I bet this also depends from area to area.

Prepaids $519Homeowner's Insurance Premium (12 months) Mortgage Insurance Premium ( months). $420Prepaid Interest ($19.86 per day for 5 days @5.125 %) Property Taxes ( months) $99F. 

The bank was going to require 100% of PITI to be counted in the ratio, even if prepaid as part of the loan for the year in which we intended to complete the flips.

“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).”https://www.fanniemae.com/content/guide/selling/b2/1.2/03.htmlI would like to get as much out as possible and move to the need deal.

My accountant expenses 1/3 of cost on the income statement each month and puts the remaining balance on the balance sheet as a pre-paid expense.

Typically it's 25% down conventional with about $11k in cloisng costs/pre-paids plus the $70k down and this eats into a lot of my capitol. 

What if they want to pre- paid a big chunk during the 5 yrs term?

That did include ins and tax prepaids and recordng fees, closing fees that they do not control but still....Its not worth it to me to pay 10k on a 80k, especially with as little as I was going to make on the deal. 

A lot of times that dollar is going back into your pocket via a retirement account or as prepaid supplies, etc. but it's still unavailable to you for a period of time.