I think water and sewer line would be the biggest hurdle besides the zoning..

But is the main hurdle the permitting/zoning?

I underwrite to 15% combined.Management will be 10-12%, unless you have more units and can get a better rate from your PM.Your electric and gas bills look like unreasonable guesses for two units in MN.

As far as PM fees go, once you are at 5+ units, typically you will be able to negotiate for a bit of a discount - 7% is not unreasonable for your situation.

Keep in mind there are hurdles there too.

The 25% down is my biggest hurdle.  

Now our plan is not to do so, however as owners we find this request unreasonable since it will give legal rights over the property to someone who has no interest in it.

My calc for value:  gross annual rent x 0.5 (50% expense ratio is not unreasonable!!!

The Homstead exemption is the biggest hurdle, so figure out how you're going to sidestep that first, as that will inform what type of property and what neighborhood you want to look at.

Ultimately, you should ask for transparency into their operations, people and properties as well as timely (at least monthly) contacts.It is rewarding though after the initial hurdles, just like other RE opportunities.