Don’t forget, you haven’t earned any of that prepaid rent.

Ive not found a bank where you can use it as conveniently to use as a debit card instead of a credit card.My holdup is that any cash in any account is lost traction.

Good credit and I have  around 700 a month for other debit.

The prepaids for Insurance and Taxes aren't too crazy but those often change daily based upon which mortgage company the lender is able to get the best rate from each day.However, once you have someone pull credit to do the work up you may as well get some other options as well.

My question is it difficult getting the refinance after you have used a line of credit in regards to your debit to income?

., origination fees, commitment fees, lock-in fees, appraisal, credit report and flood certifications), or a cash advance taken by the Borrower on a revolving credit card account or an unsecured line of credit to pay these fees may be used as an acceptable source of funds and may be considered Borrower Personal Funds as described in Section 26.2(a) if the following conditions are met:The maximum amount charged or advanced may not exceed the greater of 2% of the Mortgage amount or $1,500The amount charged or advanced must be included in the Borrower's total outstanding debt and the repayment of such amount must be included when determining the Borrower's monthly debt payment-to-income ratio as described in Section 37.16The Borrower has sufficient verified funds to pay these fees (in addition to the funds needed for the down payment, Prepaids/Escrows, other Closing Costs, Financing Costs and reserves as required); however, the Borrower is not required to pay off these charges at closingRefer to Section 17.38 for instructions on delivering Mortgages where Borrower uses a credit card, cash advance or unsecured line of credit to pay fees associated with the Mortgage application process."

I don't believe pre paid rent is really a protection as some do, I just see it as kicking the can down the road. 

Consequently, pending completion of the associated debit transaction, you should not withdraw from your bank account any funds that are the subject of this reversal.Here are some steps you can take now:If you believe this was an error or misunderstanding on your renter's part, get in touch with them directly and have them withdraw or rescind the dispute or fraud report with their bank or card issuer.

Cash on Cash return seems low at ~3.4% which includes prepaids for property taxes.

My initial analysis showed that this should cash flow $300 per month with our initial investment of $21,000 (25% downpayment plus closing costs and prepaids).