If it is month to month, find out how much notice is required to increase the rent and if there is a cap, then let the tenant know in writing. 

Most of Henderson and Summerlin are A/B, but there are areas that are C (probably where you're looking, if you're looking at Fourplexes) Typically, those sell based on FMV and not a cap rate.

Using the direct cap method with a cap rate and net income to get to a value can work but it just depends on the amount of units and the lease structure.

  $41,382 / $850,000 = 4.87%That's a cap rate of 4.87%... not the 7.7% cap that's advertised. 

I want a cap rate of 8% if I am buying with cash. 

Using your high numbers for rent with the basement addition I get a cap rate of 4.9% with a 50% expense rate and a 5.9% rate with a 40% expense rate. 

A cap rate has to be higher than your cost of money. 

An A class property garners a lower cap rate then a D class property, and the cap rate in Omaha will most likely be different then in New York, or Los Angeles areas.And obviously you can negotiate anything, so the price isn't guaranteed to be based exactly on that cap rate.But based on a cap rate valuation, if you can (intelligently) cut expenses, and increase rents so income increases $100 a month, that is $1,200 a year in increased income, and based on the 10% cap rate valuation, your property is now worth $12,000 more. 9% cap rate would mean it's worth $13,300 more.Here's one article that discusses it:http://www.biggerpockets.com/articles/924-understanding-value-in-multi-family-units

An agent should be able to help you with a cap rate for an area.

Look for stable properties with Cash on cash 12%+, Debt coverage ratio 1.6+ and a cap of 8%+ This will give a good return to you and the investors.Good luckPaul