You aren't necessarily building that much equity (cost of building exceeds the value) but it is a third option that is a hybrid.Another factor is location.

Purchase price: $137,500 ($44,000 in to the property... loan at $101,000)Appraisal: $180,000   ARV: $195,000Est rehab cost: $7,500Scenario #1: 75% LTV cash out refi at 4.25%...

But the cost of maintaining and filing an entity correctly is much higher and also needs to be considered. 

This approach is cost-efficient and eliminates the complexities of dual-state filings.

Cost overruns were tremendous.

Meaning, if you take the money only, you would have depreciation recapture from your cost basis up to the original purchase price of the building (not including the land cost because it wasn't depreciable), plus a capital gain up to the insurance proceeds.Hope this makes sense. 

If you try to do it all yourself, the risk is much greater because there are many more opportunities to make a bad decision that can be very costly.  

They are about the same cost (which surprised me) but for a rental property that is really probably mostly for pets, I'm concerned about maintenance and upkeep.

I still think it is a good area to invest in despite the increases in cost.  

@Andrew Self I would like to think that my company is the best and offers the lowest rates and closing costs, but perhaps I am bias.