I could put a down payment for a conventional (20-25%) 550k duplex, but I feel it could hurt my chances of buying as many duplexes in a 5 year period (for example) if I go conventional VS an FHA at 3.5%. 

Option 1 - NOI = Rent - (maintenance, vacancy, management, property tax, insurance)or Option 2NOI = Rent - (property tax, insurance)in both cases i assume DSCR = monthly payment/NOI

It depends on what the terms of your mortgage are.Pros-with no mortgage, you have higher cash flow.Cons-if you plan on buying more properties, you are better off saving the money for a down payment for your next place.The big questions are: can you get higher than 7% return if you invest that money elsewhere? 

The down payment is 25% down for single family residences and 30% down for 2-4 units.

I agree with Erik, although their are some investors out there that will help fund the down payment/entry fees that you mention, they typically are friends and family that trust you and believe in you.

There are significant details that I'm choosing to leave out regarding rent payments and balance left for the owner as you terminated the lease early. 

sm IS LOADED WITH FAKE LENDERS NO LENDER IS GOING TO WANT A PAYMENT THROUGH PAYPAL FULL STOP.

Looks like Paramount is under Federal investigation for having failed to make agreed payments. 

Quote from @Mary Jo Carruthers: @Albert Hepp Did you know that there are quite a few non profits and also the city of Austin in the austin texas area that provide down payment assistance for first time home buyers?

Currently, we are learning more about investing while we save enough capital for a down payment for our first rental property.