What's wrong with this plan?

[Chris Shipman]

I have just joined BP and I am trying to get all my ideas out there and let people who have more experience than me (which is none, so shouldn't be hard) tell me why it is a terrible idea before I make the mistake... 

I would like to get into buy and hold properties but it seems like raising capital to expand will become a major issue very quickly. 

I have read a few success stories and heard some pod casts that use the idea of using investor's capital to buy a house for cash. Then fixing up the home (still with investor's capital) and once done refinancing the home, paying off the investor and then moving forward with either selling the house outright or putting it up for rent.

I imagine my plan going as so:

1. Find a foreclosed home/something undervalued and using investor's capital to buy. (Lets say $80k which should/could be worth up to $200k)

2. Using the investor's capital and fixing up the home. (Spending $20k on rehab)

3. Once the home is done refinancing at the $200k value (Lets say an 70% loan to value, pulling out the $140k)

4. Pay off the investors $100k + 20% ($120k) 

5. Left with an income property in which you are ~$140k into but a value of $200k (plus the $20k from the refinancing)

6. Either renting it out or selling. 

What are some of the glaring issues with this "plan?"