As Bill says, they're prepaid interest.

They can be prepaid at closing – 3 draws for $535 or $265 per draw ExampleARV $180,000 X 70% = $126,000 – this is the max loan amount however will only lend what you needPP $100,000 + rehab $30,000 = $130,000 X 85% LTC = $110,500 loan amountRehab - $30,000 will go into rehab escrow – can take up to 3 draws Monthly loan payment based on $110,500$110,500 @ 9.99%/12 = $919 – interest onlyCan buy rate down with interest reserves - -.50 for 6 months and -1.00 for 12 months

On financed deals it gets a little more hairy because the lender has to approve them in underwriting and from what I have seen the lender typically limits them to the closing costs and prepaids (if they approve them at all) consider them the same as seller contributions to closing costs.

Sure, you pay more prepaid interest, but you also force the seller to cough up most of that month's rent at close.

If you have a security deposit equal to two month's rent (or security deposit + last month's rent prepaid, which is essentially the same thing, money-wise), then you can at least break even on the rent. 

contributions exceeding the actual cost of prepaid expenses, discount points,and other financing concessions?

Local laws I have taken prepaid rent from two tenants and denied two others.

In fact , I wonder if having bonds is even worth my time,  I make twice as much on my prepaid cards savings accounts at 5% yield (pre-tax) than my intermediate bond return.Tip:  research mango money  cards (6% APY), netspend (5%), etc. for emergency savings.

If the borrower is able to get out of the loan before the end of the term, I guess he just loses the remaining prepaid insurance?

The report shows all paid expense invoices for all properties and units excluding liabilities (deposit, prepaid rent, pet deposit, etc.).