BRRRR is common in commercial and your existing lender will need more of an appetite for a refinance if they know that they are going to loose the loan.Fannie, Freddie, and some local/regional banks actually have a supplemental loan feature that facilitates a BRRRR...the original loan stays in place and you get a supplemental loan when the property has been re-positioned, rents raised, and stabilized.There are also construction/perm loans where rehab is financed during the IO construction period and then the loan starts amortizing later. 

I am currently in short term rental at my new duty station and a colleague owns the house I am staying in.

She may just be uneducated about the preferred vendor system, so tell her what she gains by staying with your agents.

My vote: stay away.

My intention was to allow the current renter to stay in place for 3 months, end the lease at which point i would do the rehab. 

You are 100% willing to let her out of any lease and return her full deposit...but she needs to be out RIGHT NOW....... the house is not safe for her to stay in and you cant fix the issue while it is inhabited.

My approach is like Warren Buffet's - stay away from the crowds when it comes to investing.   

@Phillip Tamez, I try to stay away from using “rules”, as that can always lead you in strange directions.

Homes priced from $150,000-$250,000 stayed on the market less than 50 days on average, said ABOR's report.35,000 new jobs expected next year and the year after (no including if Amazon chooses Austin).  118 people are moving to Austin every single day and US News recently listed Austin, for the second year in a row, as the number one place to live in the US.   

I stay C+ and higher.