Also, what is the risk of bank calling the loan and what happens if they do.Balance $102,500As-is value 125k (with minor repairs)10k repairs ARV 130-140k25-30k repairs ARV 160kPITI is 1,000Market rent 1200-1300.I would love to hear your thoughts on what would be the best scenario and what you have done with subject to deals.

Or if you want to get rehab loans through a bank, your options would be a 203k loan (if you intend owner occupy the property) or a HomeStyle Rehab loan if you do not plan on it being your primary residence. 

Since banks are not friendly to this kind of property, how would you go about financing the repairs.

Typically, at least at my bank, they are going to want to see you put the cash in anyway, regardless of the seller hold back, so in this instance the 250k would just be a second mortgage, the bank would still be in first position on the loan, and still want you to put in 375k...Again, this is all depending on the bank so not every bank is the same. 

@Paul DeSilvaWhich bank did you use to get the refi?

Assuming when you say "income requirement" you're referring to something along the lines of "Minimum income 3x rent" and not "No Section 8 income allowed" which could be considered a Fair Housing violation in some state jurisdictions (including yours) based on source of income. 

How should I present this deal to a bank, hard money lender, or private lender?

Probably not a bad idea to run the next hypothetical deal by your bank and see in their eyes, which property would allow for the most leverage to be created for the next deal.Great problem to have, 2 good deals.

In NYC, you're banking on a lot of appreciation.

There are ways to appeal if they don't count a unit, like referencing mid-1950 water records, but I wouldn't bank on that as a buyer.