Cash Flow Expectations on Low Money Down Deals

[Nick Gray]

My main impetus for jumping into the real estate investing game is the potential for (near) passive income and the financial freedom that it brings. Thus, I am only interested in deals that cash flow positively. However, I am currently looking for a duplex to house hack on an FHA loan (3.5% down) and I recognize that the 96.5% LTV and PMI will make positive cash flow, even when I eventually move out and rent both units, more difficult than if I had a conventional mortgage.

The more cash flow the better of course, but is it likely that I can find a positive cash flow deal with such low money down? Should I instead be satisfied with deals that, under FHA loans, are break-even from a cash perspective and then, once re-financed into conventional mortgages with 78% LTV, cash flow positive? In case it is relevant to this discussion, I live in a semi-expensive Northeast market (Seacoast New Hampshire).