However, with the financing options in this time period FHA 3% down to mortgage a property I feel is a better scenario.

Unfortunately, there would be no way for them to get permit for addition or pool with that in place, so they chose another property rather than tracking down owner or dealing with adverse possession in 1.5 years when it meets the state time period. 

Beyond that a lot of towns do periodic revaluations of properties in their jurisdiction.

However it wouldn't be very cost efficient to do two refis within 6 months of each other (delayed, then cash-out based on ARV) since each closing would probably cost approx. $3k.

@Maya V. you probably should talk to an attorney about this, but I think the situation is a bit different if you buy a property and want to move it (an OMI, and this is not what you are talking about) and you just want to move away for a couple years and come back. there also is a court case right now - a couple that is in the military (one of them is) and moved away for a year, then had to pay the displacement fees to their tenants ($5K-12K or so, I think) - but apparently there are ways to get around this payment if you draft the lease a certain way (again, talk to an attorney) I have found that with other rules in Oakland, if you move in as an owner, you have to stay a certain period of time (or offer the unit at the old price to the old tenants)

Walk a mile in their shoes.....This business does 2 things after a long period of time. 

Reliable, relatively inexpensive, and efficient to run. 

They have the best training period.

@Tommy Johnson, There is no statutory holding period. 

A better method than using percentages in my opinion would be to total up everything you think the property will need to have replaced during your hold period for example 1 roof, 2 water heaters, 2 floors, 2 furnaces etc., 1 driveway, 1 porch, 20 windows... whatever Capex you anticipate doing while you own it, and total that up then divide the number by the number of months you plan to hold and use that as your Capex allocation instead of a percentage of rent.