When refinancing to a cash out loan that mean you would have to roll in the first loan...so if you had a good rate, you will be forced to carry the new rate on the entire balance.  

But also an insurance agent told me the insurances are temporary and don't carry on to new projects.

Rehab loan is one loan, one closing, keep for a bit then refi.If the seller/family member would carry back the loan for short time, you do a seller carry/wrap/aitd mortgage, you fix it up and or rent out occupy for a year or two then sell or refi.

Do you have the cash to carry that property for several months while getting it rented up?

The simplest way is to get the seller to carry a note, with your 10K down.

Because residents will own the homes, you will be moving homes, renovating homes, selling homes, carrying paper, so there are specific contractors you will need to find, and licensing and regulatory requirements that you will need to know.  

And, I fear that if I make her carry out her lease, things could get ugly between her and her roommates. 

He carried the note for 1 year at 6% interest only.

THEN After so many days, make the builder pay your carrying cost (since he is the one holding things up, at that point, you did your duty on the front end.)

After all carrying, costs, remodel costs, finance costs and selling costs we made a profit of approx $40k Lessons learned?