I have around $130k in this project so far and am worried that I am going to have to take a huge loss on this project. 

If you get a project going by using credit lines or hard money, you must be sure going in that your permanent loan will be great enough to pay off all the underlying loans on the day you close on your mortgage.

They are primarily concerned with credit score and how well the property is projected to perform.

So, if you rent/refi now you can move on to the next project.

Quote from @Mike Klarman: Most Hard Money lenders do not go 100% costs on projects. 

It would also require IRS approval in this case to make this kind of accounting change.The bookkeeping will take more time, but on a good sized project it would make sense.

They are projecting the home to take 6-7 months to build. 

But you'd need to sit down with your accountant and run projections to see the pros and cons, including what you expect income to look like in future years and your plans for your properties.

If you have >50% of your existing capital/funds tied up into the first BRRRR project my inclination would be refinance sooner rather than later waiting for better terms/conditions to refinance.... not knowing whether that will take place.

The second property, since it isn’t rehabbed yet, will also benefit from a proper study once improvements are complete.From my side, I track all my involvement hours and project activities using tools so I always have clean documentation ready for my CPA it makes the whole depreciation and participation side a lot smoother.