I want to buy an investment property, Is it better to use the equity in my current home as down payment or not

If I buy the home at $175,000 (that is a starter home in my area) and put no down payment down, the mortgage would be about $1140/month using the interest rate in my area(6.9%) when I add in property taxes and insurance and maintenance plus my profit (25%), it would be about $1850/month. Who on earth would pay that for a 3 bedroom 2 bathroom house with no basement and 1/4 acre? How could anyone put no money down for an investment property and still rent it out for profit? FYI- our starter home in this area has gone up about $40-48000 in 2 years. The area is very hot. What to do?

Since the interest that you pay on your "Owner Occupied" home is tax deductable (even 2nd mortgages and Home Equity Lines of credit) where investment properties (Non-Owner Occupied) interest is not, I personally think it would be better to use the equity in your current home to put money down on an investment property. Plus, putting money down on the investment propertey will most likely lower your interest rate.
BUT, with all that being said, I don't know full details of your financial situation and strongly suggest going to your financial planner for further information. If you don't have a financial planner, I know that Ameriprise Financial Advisors is a fantastic, safe company to deal with (formerly American Express Financial Advisors until they broke away from them last October).
Anyway, best of luck with all this.

Equity is a fancy way to say loan, so just have to see how your loans compare to one another.

its a great idea... my family company does that .... we have increased our value in 10 years from 200K to 2+Million