No cash flow with FHA down payment 3.5%

[Zac Kucharek]

Hey rookie here going to invest this year!

I am analyzing deals on local MLS and Zillow properties for multi family properties. I am wanting to do a House Hack this year and am analyzing as I build up a down payment for my first property.

I am noticing as I do this most houses asking prices are more geared toward cash flowing if you are putting down 25% as most investment property mortgages require. As I plan on using the FHA I am using 3.5% in my calculation when analyzing properties and seeing that almost every property at asking does not cash flow as with this smaller down payment the mortgage payment is higher monthly.

I get the benefit of the smaller down payment in FHA to get started and to create a larger return on the amount of capital put into the deal. But I am finding at least right now that it is really hard to find cash flowing deals ( pertaining to after moving out of house hack and having both units rented, not during the live in petiod as that isn't even close to neutral let alone cash flowing on most properties im seeing).

Does this sound common to you, it makes sense obviously putting less down there will be less cash flow, but I feel with an FHA it is going to be hard to compete with the offer price of someone putting 25% down as I would have to offer way way lower for it to even hit even at 3.5%.

Thanks in advance for any help!