The lender told me that I can refinance after 6 months possibly with 1% lower rate.

You could go to your insurance company and request they lower the replacement cost or increase your deductible... if they don't want to write a policy under those conditions, you can look for another company.

Your PMI is also SIGNIFICANTLY lower on this loan program.   

I understand that rural has the possibility to have lower traffic.

My goal is to have a better product at a slightly lower price.

What's better a higher amount of line of credit or a lower interest rate?

My main question is, do property managers typically charge a higher percentage on units that have lower rents?

 $40K Purchase price and $255K Rehab ($295K total) is already over the lower amount.  

If you do it the other way your refinance will be based on a lower value.

@Tarik Nabi Are you getting lower purchase price by paying cash if no why to pay double closing cost unless you can't get loan because of rehab requirment.