A handful of DSCR lenders will cashout refi after 3 months seasoning, but the vast majority require 6 months.

Portland has gone a step further, imposing requirements almost guaranteed to trigger unintended violations.

The lender required that the property be tenant occupied/cash flowing.

This is becoming more true for government employees clearly given the recent "Use It" act which will require 400,000 government employees to go from a remote to a hybrid role which started in January of 2024 and will continue to ramp up as time goes on (Source 1, Source 2)This trend will continue as companies realize more increasingly they need to be at least hybrid to be competitive.

Validate planning zoning requirements and access to utilities.  

I’m hoping to not build until I acquire more revenue from profits of the plot via flea market, parking, boat parking, or something else that requires minimal investment.

Rehab will be required.- you may need to look outside of Phx to markets like Gilbert/Mesa or even Tucson.  

If you have a finished product, they won't move in for 60 days but your lender requires signed lease and/or move-in for refi...this will delay your refi.

In your scenario, selling the relinquished property for $450K after completing a reverse 1031 exchange will allow those proceeds to repay the intermediary without triggering capital gains taxes, provided all exchange requirements are met.

.: I would reply to his threat of going legal with the final punchlist you're requiring to release final payment.