> Generally that 10% down applies to '2nd homes' so as long as this is your vacation rental you can usually claim it as your 2nd home but on your next property it would have to be an investment property.

The term you used - UBTI - stands for Unrelated Business Taxable Income, which does not apply to this situation.  

My understanding is the taxes still apply, no matter what.  

I am now in the process of applying for my license and choosing a broker.

I would call and ask for an explanation of the charges on the settlement statement before you call around, so at least you will compare applies to applies.

Seeing these makes me a bit nervous that if we buy in that market now, do a rehab, and we have to wait 4-6months to have "seasoned" tenants  before applying for the refi it may be problematic to get the appraisal we are targeting. 

Sounds like you're missing key information by saying "I don't believe I will be eligible for a traditional loan".... get that piece of data by applying for a loan at multiple lenders before assuming you can't.

The same principle will apply anywhere, but with less appreciation in, say, the Midwest, you'll be losing out on some of the sweet CA equity growth.I gotta say, choosing where to live is more than just an investment decision.

I'm going to have them sign an agreement for a non-refundable deposit of half month's rent, then apply it to the first month of rent if they end up closing.

That is to say, to re-finance a hard money loan, I would need to apply as a traditional loan?