Analyzing Multi-family's

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Just some quick questions..

My long term goal is to purchase 4-8 unit mult-family's at a discount. Next step is too upgrade the property by rehabbing the units at the end of the lease and raise the rents.

When analyzing those properties I can imagine that the 50% rule wont be met. Especially in the bay area, california with 4% cap rates. But if their is still room to raise the rents by another 150.- then my guess would be their is still a opportunity to make money.

According to the cap rate formula: (value = increase in net operating income / Cap rate) the increase in value with a 8 unit multi family when increasing the monthly rents 150,- will be 240.000 dollar (at a 4% cap rate)

Every time a multi family gets analyzed here I almost never see the strategy of adding value being discussed here.

A bay area property will not cash flow, be the property can still be undervalued compared to similiar properties in the area. Yet if you post the deal here it would probably be advised as a bad investment. I was wondering if someone could give me an opinion about this.

Second Question: Who in the right state of mind purchases multi family's at a retail price with a 4% cap rate without any upsides? Sounds like an awful investment to me.

Third Question: How do you analyze a value add property? I have learnt that during the renovation you will sometimes have to deal with a vacancy rate of 40% or more. So Deep Cash reserves are required. Sounds like Analyzing such a project will be pretty hard and depend on many assumptions.

Anyway thanks all in advance for helping me out. If been a big fan of this site altough I never post. People Like Jon and MikeOh have given me an incredible amount of real estate wisdom and knowledge :D Thank you