Assuming the units are at least 2 bedroom / 1 bath, you likely will be able to raise rents up from the $1066/mo average over time.  2 bed/1ba units in the area should get about $1200-1300/mo with rental grade finishes. 

First, Claud wanted to convert his new Denton home from a 3/2 into a 2/2 and make the master bedroom bigger among other items.

Then I used $50k of my own money to fix it up, add bedrooms, bathrooms.

I was a little hesitant with all being 1-bedrooms, but they are nicely equipped with dishwashers and laundry. 

The challenge for us is finding the gems where I can push the value on the house...like by adding an addition or taking unheated space and converting it to heated living space, or adding another bedroom/bath. 

If you play around with the numbers you can try to maximize cash out and keep it cash flow neutral, assuming rents don't go much below where they are now.Your tenants would be paying down the mortgage and you would potentially be making money on that equity.Of course you want to be responsible and have ample reserves.

We will also work to keep increasing our salaries, but I expect steady rather than sudden increases.I keep wondering if there is any way to use house hacking to get into a two bedroom unit in a multifamily property so that we could purchase a home and keep the mortgage payments low.

Our current househack is a duplex with 3 bedroom units which is nice because we both work from home currently.

The first thing I do when evaluating a potential deal is to run a quick CMA within .25 or .5 miles of the subject property while filtering for # of bedrooms/bathrooms, sq. ft., year built, etc...

Live in one of the bedrooms and rent out the other ones.