I recommend chatting with a few lenders to explore your options.

I am now a Private and Hard Money Lender and help clients across the US with rehab fix and flip, DSCR and many other types of loans. 

Get permission from the lender before you do the transfer deed.

Talking with a investor friendly lender and talking through what this looks like, what you can qualify for, etc. can be very helpful. 

I've met partners, lenders, contractors, essentially my team and its been incredibly valuable.I also recommend finding someone in your market doing what you want to be doing at a larger scale and figuring out a way that you can provide them value.

Here are a couple of factors to consider (and facts to know): - The financing portion can be very tricky if your lender is not familiar with the improvement exchange structure.  

Is this the point where I need to go for private funding and hard money lenders?

I'd recommend using a good lender that covers the rehab budget - so you are not out of pocket for the purchase & rehab amount.

Reach out to a variety of lenders, as banks, credit unions, private lenders, etc., all have varying terms.

What Erik said, also, you need to be aware of seasoning requirements (with the dscr lender) prior to a cash-out/refi.