Managing rentals isn’t for everyone, especially after dealing with bad tenants, challenging property managers, and increasing costs.

Also, watch out for any litigation or construction issues that could lead to HOA fee increases down the road.Alternatively, you could consider a good deal on a single-family home or a 2-4 unit property.

Is it best to simply increase rent by a fixed amount (e.g., $700) to cover this, or are there other strategies for handling utilities in this situation?

You can earn strong appreciation but also lose a lot as the entire state becomes increasingly hostile to landlords.

I would want to make improvements to all units and increase the rent to market value when the renovations are completed.

There are a lot of ways to crash and burn, so increasing the odds of succeeding long term should be your highest priority. you can always sell your local assets once you're comfortable managing rentals and ready for a market that better-suits your criteria. btw, kudos for being self-aware of your limitations.

A tenant now enjoys these enhancements at $1400/month, showcasing the property’s increased value.

the key to a BRRRR, whether it's going to be an STR or LTR, is this:distress.you need to find a significantly distressed property, such that you can increase the ARV via the rehab. 

When I run the numbers based on these rents, the property operates at a negative cash flow.If I increase the studio's rent to $1,400 per month, the property becomes cash-flow positive.

Disallowed losses under wash sale rules increase the cost basis of replacement securities, potentially reducing future taxable gains.This post does not create a CPA-Client relationship.