If you're talking buy and hold your best bet for affordability and appreciation are Milwaukie and Lents.

From what I have read many institutions are willing to work with landlords and properties in many of these areas are quite affordable.

I haven't found any hard money out there I could afford to use on a project, makes no sense. 6 points and 12% interest.

While he lived there, it was fine - he could afford to pay the $1000 difference + repairs + vacancy loss, etc.

First, you should start legal action against the agent, that is just unacceptable.Second, being an agent myself I have had way to many dealings with bad agents, so I get your frustration.  

This loan payment was amortized for 30 years to make it affordable.

However, with not having much savings, I am wondering if it is wiser to get an FHA loan with 3.5% down and the required mortgage insurance premium (1.75% I believe)  or live in a rental until I can afford the 20% down payment to reduce my interest payment on a conventional loan.

If you can't afford a few grand then you really are never going to make it anyway.even if you are out their on your own to be proficient you need to spend money on your own advertising etc. access to MLS  and used correctly alone will pay for the license many times over.. and you never know when you may become a rock star agent top end agents make far more money than 99% of wholesalers you will listen to on this site especailly the part time investors  LOL.. they are part time for a reason.. they are not RE professionals.

“While rising prices are lifting home owners out of negative equity, the strong price recovery amid the modest growth in incomes is also making homes less affordable and dampening demand.”Source: “REALTORS® Expect Price Growth Moderate in Next 12 Months,” National Association of REALTORS® Economists’ Outlook blog (Oct. 5, 2015)

Out of 5 contractors , with the most classic excuses for the delayed bid for 3 weeks or just not answering their phones and returning emails, which has been disappointed and frustrating.