My Plan to Finance my First Deal; realistic or fantasy?

[Tim Hocker]

Hi BP,

I have been following the podcast for a while now, reading books, informing myself. I would like to get into real estate investing, but I have had never more than $2.000 in my bank account in my life. I now came up with a strategy and I would like to have some feedback, whether it is a realistic scenario or total bogus. Two years ago I bought a house via FHA ($2.000 down,lol, actually I only paid $500 and the agents used some of their cut to make the deal happen. I wasn't even aware of that at the time) for $160.000. The mortgage amount is $159.500. After 2 years I still owe $157.000. According to various websites thanks to appreciation the home is valued now between $195.000 and $221.000. The plan/idea is to take out a home equity loan (according to a Bank Of America online calculator I qualify for a loan of $25.000) and use it as a down payment for investment property. The monthly payment for the HEL would be $260 (again according to an online calculator). If I buy a property for $100.000 with a down payment of $25.000 my monthly mortgage payment would be approximately $400. My combined monthly payments are then $660. If I can rent the property for $1.000, wouldn't that be awesome?

The problems I see are:

1. Finding a $100.000 property that will rent for $1.000. (Well, it will have to be a good deal, of course, maybe a foreclosure. Let's just assume it will be possible to find that deal. If finding the deal is the only hindrance, I'll happily search for it for as long as it takes. 

2. Additional costs such as closing costs (investment property and home equity loan, vacancy in the beginning, repairs)

My main question is: Is a home equity loan a reasonable way to generate money for your first deal? 

Where does my calculation not add up? What am I not considering? Where am I wrong? 

Thank you for your insight.

P.S. I do have a real estate license, but do not work as a full time agent. In case that makes a difference somehow