If you are buying cash, there really should not be a seasoning period that you need to abide by, but you'd want to get all the work done that you have identified so that the appraisal comes back as strong as it can.  

You can also sometimes use appraisal to show new value, but sometimes the appraisal equity requirement is higher than the original LTV requirement.

The house appraised for $170,000, below what I thought it would have (bummer), my lender lent me 75% LTV coming out to $127,500.

However, one of the requirements of this program is a "full appraisal " - which includes in-house photos as well.

Given the following situation: $100K purchase price, $50K Rehab, $200K ARV, and let's say hard money lender at 90% purchase + 100% of Rehab.I was talking with a local bank and received the following guidelines:* For commercial (LLC ownership), they won't re-appraise until I've owned the property for 1 year. 

During the 2006 bubble, appraisers used the actual SF to come up with a value.

We got an appraisal for $145,000!

We got an appraisal for $145,000!

Is it possible, after reno and appraisal, to take out the equity in the house and leave only 3.5% in the townhouse?

Even bank appraisals are not a great baseline, since 2008 you will almost always get an appraisal that is within 3 percent the purchase price on a purchase agreement.