Financing Multiple Properties at once?

[Maurice Webb]

Hello everyone! I hope you all are doing well!

Full disclosure, I am completely new to Real Estate Investing and when I say "completely new", I mean asking the most basic questions that may seem like a no-brainer for most others that have been in the game for six months or more. I live by the creed of "ask the 'dumb' question now so I won't make a 'dumber' mistake later." So here goes...

My wife and I were just plotting our path forward as we continue to research various aspects of REI. I read quite a bit about Hard Money and Private Money Lenders, as well as the pro's and con's of using them. To be completely honest, I wasn't sure if going that route would be in our best interest right now as beginners in this industry. So as a 'safer' bet, we decided that using FHA loans with a 30 year-fixed would be our best option since we intend to buy and hold. Mid-conversation, I had a strange idea.

I was explaining the benefits of a Private Money Lender (or Hard Money Lender) when it hit me. I wonder if I can use a Private Money Lender to secure the down payment on several properties and use an FHA loan to finance them? So here's how it played out in my head.

1) Get a loan from a Hard Money Lender for $120k.

2) Find five properties for $100k or less.

3) Use $100k of the $120k loan to make the down payments and keep the other $20k in reserve to cover closing costs and any minor repairs needed for the properties. 

4) Get the properties rented out and within six months to a year, refinance the properties to pay off the original lender.

Now, on paper, this idea sounded really good and I assumed it would be feasible. But as my wife likes to remind me, "assumptions are the mother of all goof ups." She also doubted if it would be possible to get one FHA loan (even a jumbo loan) to refinance all five properties at once. Much less getting multiple FHA loans on each property, individually, at the same time. That could mean we'd run the risk of not being able to obtain the funds necessary to repay the original lender. So back to square one...

So what you do you think? Are we on the right track? Or are we simply overlooking something? Your input is greatly appreciated. Thank you in advance!