County tax values are not relevant really a good indicator of market value.Though you do need to look into the current inventory, what development is happening in a neighborhood, and how many sales occur in that price range compared to # of houses in inventory to get an idea of where you can land compared to the comps. 

Sellers are more incentivized to take on a conventional borrower or cash buyer- quicker closing, less risk of the deal falling through, etc.This doesn't mean that your overall vision is impossible.

My plan is to possibly refinance out of the FHA loan to a conventional loan to be able to purchase my next property and rent this property or stay in this home the two years to avoid the capital gains tax and just outright sale. 

Specifically, what counts as "dead equity" and is $1166/month the equivalent of a conventional loan on $140K?

You can use 75% of rents to help you qualify with a conventional loan.

I definitely agree that the DC market is slowing and the latest data shows it, additionally there's a 9.1% increase in inventory. 

I've used a similar loan on a 6-unit in Long Beach, but it's only to turn it around and then refinance into conventional financing. 

My plan is to possibly refinance out of the FHA loan to a conventional loan to be able to purchase my next property and rent this property or stay in this home the two years to avoid the capital gains tax and just outright sale.

I recommend using a conventional loan or portfolio loan as lower credit scores are more accepted than typical FHA and investment loans.

Loopnet is a great place to start to see the kind of inventory that is on the market.