Cash purchase w/ ReFi into FHA?

[Mike Teri]

Hi BP! I have been studying/working hard to land my first deal in northern NJ but keep getting beat out by cash offers on cash flowing deals. Before I go down the path of private money, I have a question regarding a particular strategy that there doesn't seem to be much discussion about --

I have heard that buying with 100% cash and refinancing into an FHA or 5% owner-occupy conventional loan after a seasoning period is a possibility. While this would require "house-hacking" and losing the rental income from one unit for a year, I have a high W-2 income that could compensate for the reduced cash flow in Year 1 of ownership which should make the banks happy. I have found a property that cash flows well even considering the increased mortgage pmts/PMI related to the 3.5%-5% down pmt option, and I would of course be willing to follow the owner-occupy rule for Year 1.

Does anyone have any experience with this? Any lenders that can weigh in on this strategy? All feedback is greatly appreciated!

Thanks,

Mike