In other words, every year I could do another house at 3.5% (FHA "house hacking" style), but the cash flow will be less (somewhat substantially so) on these rentals in which I've only paid down 3.5% of the mortgage.

Right now, white cabinets seem to be the style for a majority of flips but you're area may be different.

You're just buying a house to live in.A low ball doesn't make any sense.Comps are similar style, size, and condition.

There will be other brokerages that may fit your goals and styles better.  

HI Chris,Yeah the option would be to utilize a 203k FHA loan or a Fannie Mae Homestyle renovation loan the only down side is that the FHA 203k similar to a regular FHA loan has self sufficiency requirements on 3-4 unit properties so if you're in a area where rents are high relative to price then you could be good otherwise you might not be able to meet the rule and use 203k to finish off your repairs to the unit.The other downside is if you used home style reno loan is that you'll need 25% of loan to cost as a down payment (acquisition price + rehab).With the Home possible program the units have to atleast be habitable shape.

FHA 203k (still permanent PMI) or the Fannie Mae Home Style loan.  

Either conventional rental or AirBNB style, perhaps?

For me I would like to eventually move more into larger apt complex style of investment.

My suggestion is to make very specific rental criteria and as suggested previously host an open house style showing and take a bunch of applications at once.

Comps:Without knowing the neighborhood or the variety of different home styles in your area, its hard to say whether or not 225 is an accurate AMV.