There are valid reasons to choose any of the above options, depending on how long you plan to have the loan for.Now $4500 to $6300 sounds really high, which leads me to believe that either you would be paying points, that those include escrows and prepaids, or that you are getting hosed. 

You got about $4800 in prepaid S and state taxes, E, F, G and your lender has no control over that.

The 1 exception to this rule is called Delayed Financing - if you purchased the property without securing a mortgage, you can do a cash out refinance within 6 months and the loan amount will be capped at the purchase price + closing costs and prepaids. 

This is considered pre-paid rent, and it can not be disbursed to you for future months.  

Please tell me you are not advocating for a cash-basis investor who almost certainly has a lease that crosses calendar year end, to accept prepaid rent for multiple months.

The question is was it prepaid in reserves or will you end up with an assessment that can derail your business model.When condos become really unpopular they can become a buy, when popular, not so much.

Maybe buy them 4 prepaid stamped envelopes already addressed to the city water bill address (I'm assuming quarterly payments but may be more than that) so they can send the check or money order in by mail on time?

Please also verify the accuracy of this information at the time you are considering these options as guidelines change.price Decorating allowancesRepair allowancesMoving costsNote—a dollar for dollar sales price reduction is also required for - Excess rent credit and gift funds not meeting FHA requirements Contributions exceeding the actual cost of prepaid expenses, discount points and other financing concessions Credit Requirements Required is 600.

If the lender (or you, as the cost will probably be passed on to you) does not want to incur the expense of a traditional legal review you might recommend the lender enroll in a pre-paid legal service.

It also says that "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)."