What would you do? SFR in Need of Rehab

[Daniel Toshner]

BP,

Need your help and advice. I have a SFR that is worth 850k with no loan balance. This is a home I am going to be moving into for my permanent residence long term for my family or could be used as a high end rental.

After rehab, home will be worth 1.4-1.5 million.  Total rehab has been quoted from 450-550 depending on finishes etc.  My question lies in the lending options.  

I have around 200k saved for rehab so my initial thought is to do a cash out refi.  I want to pull out as much as I can so I can use the excess money pulled out for investment properties that give me cash flow on monthly basis.  Here is where my question comes on the mortgage.

I am self employed and don't show enough to qualify for a cash out refi of 80% LTV through conventional loans thus I have been drawn towards "stated income or "bank statement" loans.

I have found a few that allow up to 80% based on bank statements last 2 years which I would have no problem qualifying that way.  Terms are 30 years 5.5% with 1.5 points.  

Other option would be pull out less on loan above and get construction loan for actual rehab.

Anyhow, I would love your opinions on best way to do this with max amount of cash out in mind and long term outlook.  Not looking to sell so not interested in fix and flip hard money.  Lets here what you think BP!