Home Eq. loan on rental props

[Matthew Smith]

Sorry, if this topic has been touched on before. I am purchasing a foreclosure out of state that I am going to use as a rental property for 47k. After I secure title, I wanted to get a home equity loan on the house. I was told thathe rate for this would be 1% plus prime for up to 80% of what the house appraises for. If the house appraises for 100k, then I could get 80k back out. And I was also told I could do this again if I use the 100k to buy another rental. Is this possible? It sounds too good to be true and I feel I am missing something. I would have just applied for a conventional loan with 20% down, but most banks wont loan out for anything under 50k. Any help anyone can provide would be greatly appreciated.