The only negative is that it takes a few days for the rent to process. 

I think the only merit to this is if taxes in your area are really high meaning hundreds and hundreds in negative cash flow and a long path to profitability either due to this or rent stagnancy.Since this house is in Arizona, which from all indications is a fairly strong rental growth market, and you could feasibly have the house for nothing into it with a good chunk of cash in the bank to cover the temporary negative cash flow, I would probably just go option 1 assuming the taxes are reasonable.

I hope so.For those suggesting a cash out refinance, if he is only making $100 cash flow with the current mortgage then a 7% rate on $160,000 would most definitely put him into negative cash flow on this one.

Otherwise, the current leases will negate the debt service and not affect DTI that comes from W-2.

In the long run it could have more negative results than positives.

So the property would have a negative cash flow around of -$400/mo.

I can explain the process as well as positives and negatives for RTA versus pre-built.

If you have a good credit score, a hard inquiry is less likely to negatively impact your credit score.

All sorts of rehabs/conversions can turn a total loser into a cashflowing property. ...another example: I've built ADUs in previously unfinished basements, which turned properties that were $500/mo negative into properties that now cashflow 1000/mo ...the power move was rolling the construction debt into refis on other properties at lower rates, which more than negated the construction debt...in other words, I got paid to build the ADUs (these days, this isn't usually possible--or at least, it's a lot less likely--now that rates are rising...but who knows, rates might decrease again at some point...). ...Although certain rehabs/conversions can force cashflow, there is real skill and art to spotting properties that are good candidates for these types of rehabs/conversions. ...an effective rehab/conversion is often a lot trickier than HGTV would have you believe, and choosing the wrong property to do this can completely blow up the financial model.Another approach is to learn to find properties that have something that turns off other buyers, but which is irrelevant to cashflow, and irrelevant to your business model.

Just remember: most negative reviews are written by problematic tenants.