One of the reasons for this is that the Sub2 investor may be nervous that the seller will say no.It should have been perfectly clear that the loan was going to stay in her name and you was taking over making the payments on her loan.

So increase NOI, then you can back into a rough number on what your loan proceeds will be based on your forecast debt service upon refi.

Also, most who will buy a home in the price point as a flip will likely utilize a construction loan to improve upon the rate of return.

if you do, that's great.but if you just want to do some kind of short term stint as a PM to help you invest... i don't think that's necessary.that's like saying, i'll go become a loan officer for a bit to learn lending. 

Developing contacts with other investors may lead to useful information, assistance, and even joint venture prospects.Examine the several financing choices that are available for buying houses, including conventional loans, FHA loans, VA loans (if appropriate), and even portfolio loans from nearby credit unions or banks.You might think about contacting mortgage brokers who focus on investment homes.

It is just rate and terms refi, so we can increase the construction loan amount which will be taken on draws. 

In the case that tenants in all units have just re-signed 1-year leases, can one not use an FHA loan to purchase the property?

There are a lot of details you haven't filled in in this post (which is fine), but you will likely need a key principal to co-sign loan and a contract with an experienced property management company.The key principle will co-sign the loan to help show the net worth and liquidity needed for the underwriting department.  

My initial thoughts would be to secure a construction loan for the total rehab amount based on the entire property's ARV.

Assuming you can cover a decent portion of the $60K from the 401K loan, get some sort of loan for the rest.