Analyzing a deal: Conventional vs FHA

[Denis Moreira]

Hi BP Members,

I have two loan routes I can go with : Conventional or FHA.

How many people have gone ahead and bought a property that cash flowed negative/break-even when analyzed using 50% rule under FHA terms (upfront & monthly PMI charges eat up a big chunk of expenses)? Did it turn out to be a good long term investment? In my calculations I assume all units are rented out, non-owner occupied.

But, I can also afford a conventional 20% down payment and some properties cash flow nicely (10-12% cash on cash ROI) when using 50% rule. Of course the downside is I'd have used most of my funds and could not take advantage to buy in the case of a future recession.

When presented with both options, which would you choose?