My mortgage balance is about 206k and the home is now worth about 280-290k after improvements and appreciation.

Rent control for Saint Paul passed with a 3% cap on annual rent increases and no mechanism for adjustments based on improvements or resetting to market rates between tenants.

CoC returns should include Rent, minus Principal, Interest, Taxes & Insurance (PITI), minus property management, minus repairs and capital improvements, minus advertising costs and anything else you need to run the property.Most realtors are not investors. 

@Sattir BittiYou would allocate cost basis to the unit being sold.I.E. allocate purchase price, improvements, depreciation, etc to calculate your gain.

How might it work if a tenant is offering to help cover repairs/improvements?

Never took depreciation or upkeep/capital improvement expenses on schedule E but always claimed full rent income.

@Greg Todrank I'm not trying to harp on you, but I do want to stress the importance of improving your processes.

The bank agreed but they are both under the current mortgage.I improved Lot 2 (The home and it's lot) enough to appraise for enough to cover the loan.

I have a bunch of equity built up in a couple of small multi-family properties and I would like to take cash out to do two things: (1) force appreciation by making improvements to currently owned properties, and (2) purchase additional rentals.

Since the home cannot be rented for a year it allowed the year for improvements to drive up rental income.