Right now loan rates are pretty low a"nd it might be a good time to take out a loan.I think an investor will probably "low ball" offer on your house that would make you lose most or all of your equity. 

This keeps market price low and for the locals is a determinant to selling to some investor.

I did get approved for the mortgage, with a conventional and low down payment.

Have your money ready, your lenders lined up, your LLC formed and your accountant and attorney all on the same page.Make sure your first deal is super solid and pick quality and low risk especially for the first deal. remember this is a marathon and not a sprint.

Low end new home construction in NY at the way low end is $65/sqft.

If I am purchasing a house that is in good shape, but has very low property taxes, what are the odds that the city will re-assess and raise them right after I purchase the property? 

The property cash flows and the rents per square food are about 20 cents too low.

Putting more down payment is a way you can make the numbers work better but the more you put down the closer you are to conventional financing and thwarting the benefit of low down FHA financing.The SS rule requires that the gross rents of all units even your owner occupied unit X 75% is greater than your monthly PITI (prin/int/tax/ins monthly payment).

To be fair I am a strong applicant as far as low DTI and credit score over 800, but still your rate seems high.

Also, the 40% estimate may be low, as you would increase your gross income by $100K and could easily move tax brackets.