This policy will provide additional coverage above what your existing policy covers.

The way I got around it was I had capital that I could use to payoff the load and then the bank issued a new loan for the BRRRR amount, which I then got my capital back plus the additional capital based on new ARV.  

Alternatively, DSCR ratios may not work out due to efforts to maximize the loan amount and avoid additional cash contributions. 

Pulling Equity will affect CF in the short term, but may allow you to leverage into additional units adding cash flow & equity over time.

Assuming I could qualify financially (primary income plus FHA allowed rental income contribution from additional leased units), when I become the owner of the property, would that prevent me from using a FHA 203b to house hack a second property?

I had just received a 30k down payment from another owner financed deal and I wanted to get a “second home” and get some additional rental income.

It would convert the existing structure from a 2 bed 1 bath, to a 4 bed 2.5 bath, adding an additional 2000 square feet of space.  

In addition to considering what lenders opinions might be (currently Fannie and Freddie don't want to see any more than 10% of units being STRs but not sure about LTSs).

In addition, historically cash flow is not the profit source in San Diego.

Additionally, my area has an abundance of 4-family properties in those in-between areas where a would-be house hacker can benefit from the four rental income streams (instead of just two if they bought a duplex) in order to help stay within the DTI requirements.