Based on square footage and 2 cute homes on either side I could sell conservative for 250k.

They have no reason to conserve since they're not paying.

around 32% savings on rentSo I am renting 1 unit for $20,000 a yearBased on what our other 1 bedroom properties are renting for and with this property on being right on the beach I am planning on gross rents in the neighborhood of $35,000 to $50,000 per unit, using the lower end and conserved number of $35,000 I would be looking at a return on my $20,000 rental of each unit in the neighborhood of 75%I will spend about $8000.00 furnishing out each of these units (we go after the higher end market (Marriott, Ritz Carlton cliental ) so even at $35,000 - $8000 id be looking at $27,000 giving me a return of $35% and that's for the first year with the second year going back up to the 75% return.This has turned out to be a win for him with what I figure is a rough 5% return on a $2 million dollar property that he was not able to rent on a annual basis, he has no headache doing vacation rentals.The negative for me is I am building no equity, yet making a great return on my investment.

Here's the numbers I calculated (for this situation, 50% rule has given me more conservative estimates):Conventional: Cash Flow: $415.50/mo (meets $100/unit/mo minimum)COROI: 11.57%FHA:Cash Flow: $292.77/mo (doesn't meet $100/unit/mo minimum)COROI: 13.56%Which is better - higher cash flow or higher COROI?

I did conservative estimate in that if the house will bring $700 per month after utilities, that is $8400 per year.

Your flips can go belly up, your buy and holds can’t be refi’d; etc etc.There is nothing wrong with being somewhat conservative.

I worked on lots of old houses (sometimes 100 years+) and if I couldn't determine what might happen I just gave a conservative estimate and if Iost the job, so be it. 

The expenses are as follows, conservative estimates . $10k /year taxes or $833/month 2500/year insurance or $209 month10% vacancy or $350 a month 10% repairs/maintenance or $350 a month 10% cap ex or $350 a month 10% property management or $350 a month (the property is an hour and a half to two hours away do you think it would be better to do it on my own instead of hire someone)Debt service at $700 with a 20% down payment on 160k .

Conservatively bringing estimated potential rents to within range of nearby rentals has yielded a lot more opportunities in the 1-1.25% proforma range and between $50-$115 in per door cash flow with Repair & Maint. at 10% + prop. mngmt. etc. 

But "all things being equal"...I have an opportunity to buy an investment property 3 units(2 Family with business on ground floor, all occupied with long term renters) Conservatively it will yield small pos+ cash flow, but have other personal/business reasons for wanting it and holding it long term.My question is about financing, can anyone advise which of these two options might be the better choice?