I would also add that you should look at what the market (nearby competitors) is doing so that you know not to under/over improve. 

And that some will disagree with as well."1% rule" = monthly rent should be at least 1% of acquisition costs; for some, acquisition costs include all purchase related costs PLUS any repairs / improvements needed immediately upon purchase."2% rule" = monthly rent should be at least 2% of acquisition costs; this rule applies more so for lower rent amounts, roughly $500 (and lower), and can be difficult to meet this rule at higher rent amounts.

Your P & I would be lower resulting in improved Cash Flow.3. 

As I prepare for my first house hack I'm coming up with new questions regarding how to make the process more efficient.

If I can determine precisely how much energy each living unit consumes, then I could pay the power bill and bill each tenant accordingly. 

As such, whether real estate may or may not be more efficient with after tax money that you noted you do not have, is not really relevant.Real estate can be an excellent retirement asset. 

Has anyone heard of or tried using the REEL program to fund any improvements on properties?

I would save up the couple hundred a month and use it to improve both units in a year or 2.

Rather, your wealth accumulation can come about by buying under market to begin with, in areas that should keep improving in value, and which are then 100% paid off by your tenants!

Since being there we have done many improvements and a lot of repairs.