That seems quite excessive to me both morally and from a strictly financial standpoint. 

So if you find something that a bank is willing to lend on, it will likely be tougher to boost the ARV enough to make it a true BRRRR.2 - if you finance up front AND refi, you pay financing / closing costs twice. 

I was thinking of buying a 3/2.5 condo that needs a little TLC and doing some work on it to boost the value and the rent I can charge, then renting out the unused rooms.

Moral of the story:  If you don't mind playing their game and jumping through hoops, you are covered for surprises on your personal home purchase. 

This allows you to indefinitely defer tax on the gain from the sales with a 1031 exchange (using the deferred tax to boost your ROI). 

Perhaps you should even house hack to boost ROI even further by also saving on rent every month.

My suggestion would be to, instead of beating your head against that "below market" wall in hot markets, find a creative strategy that boosts effective income generation.

It is moral, credible and respectful.

The tax typically does not add up to much and will be less than the amount of boost in return that leverage produces.  

@Jorge Morales  denied a mortgage then you and your brother should talk to her.