The reason FHA offers those sweet rates and terms is they assume the owner is living there and will take a much greater pride of ownership than your typical investor, so that should be the deal that everyone follows before, during and after the loan. 

We were initially thinking 4-5 bedroom because it sounded like (from threads around here) that's where the sweet spot was on best returns, and also because that would be the sweet spot for us using the place with family once a year.But yes, given it's our first investment property and it's out of state and we'll likely end up buying without even having a chance to visit the area first we're now thinking it might be better to start with something in the 2-3 bedroom range and ease into a larger property in the future once we've gained some experience.I am confused by the last statement though about better returns in other areas of REI. 

There is definitely a sweet spot when considering proximity + quality + price. 

With dumb math, I'm making roughly 100 dollars a month.The deal isn't so sweet when I include vacancy, of which there has not been any yet, capex, wear and tear, and time/management (still self managing of course).However, I could easily rent it for 150-300 more.

That's sweet.

PM if needed. 1,200-1,600 is sweet spot for DFW rentals, so I would try to stay in areas that see those rents. 

you're WAY over the sweet spot for the rental market. 

Let's definitely stay in touch and ill let you know if I come across any sweet deals.

I don't think we've wiped out the appraisal fee, might still be a couple hundo left of other closing costs, but typically I'm not a huge fan of a 0.25% rate bump, this is the sweet spot in my view.

@Mark Miles that’s some pretty sweet returns.