Buying cash then refinancing--how does it work?

[Vonetta Booker]

I've come across a potential rental property that's currently on the market for $40k (rents in the area can go up to $1300/mo), and the seller wants cash only.  (It's a 3/1, needs probably about $15-20k; a new kitchen, bath, paint, refinishing floors.)  Although I have enough saved up to purchase it cash w/ a decent reserve amount left over, ideally I'd much rather leverage instead.  

How might it benefit me (and is it even possible?) to buy the property cash, and then refinance?  I've heard others talking about this strategy--but I'm not exactly sure how it works.  

If someone could break down how refinancing after a cash purchase works--and if it would even be feasible in the above situation, that would be awesome.  Thanks!