If you try to refinance with the same institution I doubt they give you cash out within a 12 month period (after stabilization).  

Continuing this pattern of building upon more restrictive zoning, a zoning of MX6 (mixed-use commercial residential) or CC{1-3} (Commercial) does not prohibit residential properties provided the density limits of the zoning are respected.The only place where things vary are in some the institutional and industrial zoning where there may be a prohibition on residential use ... but common sense would likely lead you to the same conclusion.Check with your local planning department to understand how zoning works in your area.

After I talked to several institutions, and several No's later, I was back to square one.  

We push just as many high net worth, or our traditional MF buyers into SFR portfolios because Institutional buyers tend to have more strict criteria.

Second, you shouldn't be scared of commercial because if you are investing as an individual, the requirements from institutions or the higher interest rate from private money wiping out your returns would prevent you from even entering into commercial real estate.

Are there websites/banks/institutions that you like to use to find REO properties?

Loopnet just has the 3rd tier deals institutions don't want...

Goal with this is long term buy and hold.If I run the numbers with slightly under market rents, and institute RUBS, it ends up cash flowing about 525/month (including PM) which is about 9% CoC. (30 years @ 4.9 %, 25% down)Those numbers are pretty good for this area from what I've been seeing.

Check with all the possible finance institutions so may be u will end up with some one who let u refinance upto 80%.thanksRaju

Taking interest earned penalizes people who save, they should be encouraged, and the more money saved, the more money available for lending out, both personally and institutionally.