They came back saying it needs to be approved (which is fine) but now also want to potentially charge $6k for a portion of the lot that is owned by the community to install rocks/gravel. 

So, I was wondering if it would be smarter to use the time I have on this current rental lease to start looking for a small multifamily property to buy and house hack (with an FHA loan). 

The IRS doesn't care about the type of loan you have on it. 

The first step is speaking with a loan office to get a better idea of what you qualify for, and then start figuring out where you want to live and analyzing deals.

It may make sense for you to buy a 3-4 unit building that you can move into one unit and get the low down payment on for owner occupied loan.

They came in a 6.375%, no loan origination fee, etc. and said I can refinance at anytime with no prepayment penalties, seems almost too good to be true.

Appreciation there is low, rents are low, and assuming maintenance as a fixed cost (for example, a hot water heater costs $450 from Lowes in Allentown, $450 from Lowes in Scranton, installation takes the same time, and labor costs aren't all that different), the ROI isn't great.

So, my plan is to get a loan or line of credit for the renovation for 18 months and then refinance the entire property when the balloon payment comes due. 

I would recommend starting as a Loan Processor first and then transition into it or just go 100% full time and learn the craft.

No-doc equity loan?