I don't have crazy high interest debt I would pay off with it or anything like that, but it seems wise to go ahead and secure the line of credit while homes are appraising so high.

I would say pay close attention to the volume of comps wherever you end up...some of these transitional locations have many more $125k properties than $350k properties...combine this with lack of experienced appraisers and you have a potential recipe for disaster.

You would buy the home with 10% using hard money, improve it and refinance the existing lien using the new appraised value( will the lender allows using the new value on a R/T refi without a waiting period).  

If you removed unit over the garage before closing will it appraise for the value?

I also tried with Brightstar Credit Union locally but their appraisal came back too low (desktop versus in person so my rehab updates weren't considered).

Although it appraised at $1m.  

Before knowing about the whole househacking ideas.I bought this condo for 375k (appraisal valued at 385k) I did 15% down and got a conventional loan for 30years 3.25% fixed.My mortgage is $1733.68 (1387.23 princiapl & interest + 282.70 escrow + 63.75 pmi) + $300 (hoa) = $2033.68I am thinking about either selling or renting out the condo in 10 months (Lender told me since it was primary residence I'd have to live here for at least 12 months.)I heard $100 profit per unit is totally fine...

As long as the prospective buyer accepts the deficiencies identified in the inspection, and the sales price is in line with the appraisal (or the buyer is willing to pay the difference), there should not be any issues here. 

Typically they'll only loan 75% LTV on appraised value for a cash out refi on rental props. 

Question for those who have had pre-rehab appraisals done for financing a combined purchase/rehab loan.