What if I used the first-time buyer to get ahead?

[Kacie Benson]

Just a thought I've had for a couple of weeks now. 

What if I used the FHA loan and paid the PMI for a condo where I live and then get a rental property? I would have to take HOA's into consideration but . . .

Buy $350,000 as first time buyer with 4% down = $14000

Rent one-bedroom for $1,000 

Payment is $2435 - roommate rent Payment $1,000 = $1,435

Once the dust has settled I would buy a small rental property. 

Buy $180,000 with 20% down = $36,000

Monthly payment = $1223

Rent the 2br for $1600/ month

Profit= $377

The monthly payment for two properties = 1,435 - 377= $1058

My monthly total payment = $1058

My current rent = $1125

So I would be paying less than I do right now on rent to pay towards two properties and also be building equity. I included PMI's and HOA's but I'm sure my math is too conservative. Even if my cash flow was still less on the rental property it would still be worth it? Might be best to have PMI's but bigger cash flow. Can you buy another property after using an FHA loan? I would live in the property with the FHA loan. I would be spending $50k + but that is okay since I have saved up for this.

It's difficult to know what to do first. Buy my condo I will live in with 20% down or 4%.. Do I spend all my money getting to that 20% down or save some of it to buy the next prop. Or buy a rental property with what I have now and start cash flowing but continue to rent and subtract from buying the big one. I know house hacking is the best. Plain and simple. 

there might be a law against this? 

Thoughts?