Buy Cash and refi into FHA

[Jaden Ghylin]

I'm looking to purchase an owner-occupied SFH in Minneapolis in the next few months that needs rehab. I've actually been through the ringer on making offers now and financing is a pain. It seems like the cash buyers have a huge advantage on the REOs over buyers like me offering with 203k or even investor rehab financing.

Because of these reasons and being tired of dealing with banks, I'm looking at freeing up some accounts and writing cash offers myself with the intent to re-fi immediately into an FHA loan at 3.5% down, 5% interest. I believe this will allow me to write much stronger offers with the intent of getting a property for a deeper discount by closing faster with cash.

Is there any reason I can't do this? The only thing I can think of is seasoning, but I believe they've lifted the 90 day "flip" rule, so does that mean I could refi right away into FHA?

Is there any reason that this might be a bad idea? I'm just thinking if I can get an extra 10-20% discount by using my own cash to grease the wheels for a few days, that seems like a great return for almost no risk. What am I missing here?

-Jaden