Build - rent - refinance - repeat 

They can provide guidance on potential legal options and rights concerning the city’s demands and the lender.Negotiate with the City:Seek Extensions or Variances: Your friend can request an extension on the deadline to comply or apply for variances that might allow the property to meet less stringent requirements.Explore Grants or Subsidies: Check if there are any local, state, or federal grants or subsidies available for renovating older properties, especially those providing low-income housing.Engage with the Lender:Discuss Financial Hardship: Present the case to the lender, explaining the situation and the financial hardship imposed by the new building codes.Propose a Loan Modification: Suggest modifying the loan terms, such as extending the loan period, reducing interest rates, or even deferring payments temporarily.Negotiate a Short Sale: If the property must be demolished and rebuilt, your friend can discuss the possibility of a short sale where the lender agrees to accept less than the owed amount to avoid foreclosure.Explore Refinance or New Loans:Seek New Financing Options: Look for other financial institutions or private lenders willing to provide financing for renovation or rebuilding.

I am also getting 10k seller credit from seller, and could either use that one to buy down interest rate or just pay off the closing cost. the lender is giving me few option one with higher fund at closing and lower interest rate, and one with lower fund at closing with higher interest rate (about 0.2% difference) With the high interest rate right now, do you think it is better to do higher interest rate, and refinance later or should I just try to get as low as interest rate as possible and do not worry about refinance ? 

Mind sharing who you used for lending for the refinance?

I was wondering if I am in this situation again, can I pay cash (I have the liquidity) and then refinance after closing?

When you do a cash out refinance on a deal, DONT take that cash and plow it into another deal. 

Are there any banks doing refinances with some good rates at the moment?

I definitely will refinance down the road, but I want to make sure I’m making the smart decision now and purchase with the intent to either rent long-term, or do short-term rentals. 

The hard money loan is only there for about a month so you can refinance it with your new conventional mortgage loan.

There is a component of doing a cash-out refinance, but it seems the thought would just be trading one loan for another in that case for an extra ~$5k of leverage.