I would look at the DSCR loan as the first option.By the way, I suspect you are going to be disappointed by any refi appraisals   ADUs typically appraise poorly   JADUs can lower the property value Vs having the space as part of the primary unit.  

But would I tell a person I don't know to find and buy a severely distressed property, take out a hard money loan to buy it, perform a monster rehab, and then refinance and hope for the best? 

Here in the USA you need what's called a "construction loan" and it's also very hard to find a company that will insure you if you're a newbie.

30-Year Conventional: 7.01%30-Year VA Loan: 6.40% Drive Safely, Las Vegas!

*Aggressively paid down debt, focusing on loans with the highest interest rates and lowest balances that could be paid off the quickest, converting debt to cash flow.

@Charlie Loomis use Metron meters but do not use their installers.

Make sure to provide clear disclosures to the seller about the risks involved, especially regarding the existing mortgage staying in their name.Insurance Considerations – You’ll need to work with an insurance agent who understands sub-to deals, as the lender might require a policy that keeps the seller as the named insured.Due-On-Sale Clause – While banks rarely call loans due, it’s still a possibility.

As a loan officer, I've seen a few people go through the same scenario of basically breaking even. 

My borrower is refinancing the loan to hold the property (BRRRR) and I'm wondering if the new lender will have any concerns with this policy. 

Credit pulls for the same type of loan within a short window (usually 14-45 days) are treated as one inquiry, so your score should be fine.