We were fortunate to save enough to buy a new primary home this summer and upgrade (850k - better schools, neighborhood, location, etc.) and are now renting our first home for 3k a month to a young family with kids (roughly +$500 cash flow/mo).

In the case of a roof, etc. you could renegotiate a higher sales price (amend the contract) to cover the cost of the upgrade (if the market will bear the increase).

It appears the units are below market, however with some cosmetic repairs and perhaps some capex's I feel I could increase the rent by at minimum (based on local comps) 68%.I would offer 85% of list and estimated $20,000 in repairs/upgrades (this is probably a generous estimate - the property appears to be in good shape, basically needs a face lift).With all these figures, including the 50% rule, financing with 20% down @ 3.5%, I come out to a profit of $262 per unit and a cash-on-cash return of 9.53%.So, does this seems reasonable?

Removal or deactivating will cost a few thousand but not 10s of thousand and you might want to convert to gas or upgrade to a more efficient boiler anyway.  

Your upgrades may not be worth a whole lot if the rest of the comps are low, unfortunately.

Live in it for a year while fixing it up, paint, floors, minor bathroom and kitchen upgrades, fix anything damaged or old.

It was a foreclosure that allowed me to do some (mainly cosmetic) upgrades and sell for a profit.

This is including MEP work being completed, but no upgraded finishes at all. 

Also, what language do you use in a sale that gets the same message along... that the seller wants to make it clear that he just doesn't want to make any unnecessary repairs or give credits for obvious upgrades?

Along with the standard work I do on projects, these units included replacing all galvanized water lines to copper, upgrading the electrical infrastructure and installing instant water heaters.I hope that this helps!