If you're investing out of state, I'd recommend investing in a property in an appreciating area that also provides cash flow.

Please write an honest either a critique or a correction to your critique. 

Rent control allows an owner moving into a unit as being legit cause for terminating tenant at lease end. 

After listening to a few BP podcasts, it really lit an interest.

Also, if I was to take out $50k from the first property to put a 25% down payment on the second house, would there be an easy way to tap into the rest of the equity in the first house if I wanted to take another $50k to buy another house in the future? 

Investments are best done before it's an emergency!

Sounds like a good choice then to do the HELOC, especially if you are going to make it a rental in the future and a HELOC will be harder to come by once it's an investment property.

And is there any angle I'm not considering that would make this an unreasonable idea to pursue?

You'll benefit greater from the appreciation and loan paydown in the long term and in the short term it's not much more to manage a duplex/triplex compared to a single family if you're managing yourself.In the end, I would give yourself a few months to talk and deliberate, but the best way to get going is to start looking in an area and look at 100 deals in that area.

They may even want an appraisal to verify that they have plenty of coverage on their loan.