With the lower price point rentals, you basically just tread water.

As far as ethically that is part of my nature and I don't care for the aggressive (potentially predatory) strategies discussed by others, but I see value in offering a transparent and convenient service with lower costs and faster turnarounds than traditional MLS transactions. 

So you got lower prices and lower interest rates coming.

If they are legit and you don’t have any other offers then I’d have the conversation with them but I’d want a higher than normal down payment (ideally 50% or at least more than the normal 20%), a higher than normal interest rate (at least a point above the prevailing rate so like 9-10% right now, but you can structure it as interest-only payments so their monthly payment is still lower than conventional), amortized over 30 but with a balloon in 3-5 years, something like that.

The agreement reached was the landlord would lower $100 of the rent (current rent: $3100) in exchange for us to paint the two bedrooms.

Just not seeing a good use case for FHA these days other than the lower interest rate.  

the lower the cash in (starting with the DP), the quicker you recover your cost. 2)  Solid, as in equity. 

Then you can do a 1031 exchange or sell it at a lower tax rate. 

To do a 100% BRRR the cap rate has to be lower then interest rate.

This will lower your monthly living expenses while your tenants help pay down the mortgage and the house appreciates.