However, we (my parents and I are the owners) noticed that they are using the HVAC in excess and using what appears to be unnecessary electric (TVs and lights remain on even when not in use and air conditioner is running constantly).

I think it's a great strategy for experienced well capitalized investors, but many new investors with limited capital should tread lightly.

Walls Remove/treat mildew (per surface) $15.00 Repair hole in wall $55.00 Repaint (per wall/ceiling) $40.00 Doors Replace door (interior) $165.00 Replace door (exterior) $485.00 Replace weather stripping $25.00 Electrical Replace light bulb $3.00 Replace light fixture globe $20.00 Replace light fixture $65.00 Replace electrical outlet/switch $15.00 Replace electrical cover plate $2.00 Actual charges may vary based on condition, vendor and/or cost of materials.

I am looking at an occupied multifamily in "downtown" Urbana that after some light work should hit the 2% rule.

Cashflow is just what keeps the lights on, while you get there.Cost per unit seems very cheap to me, which makes me question the neighborhood and the tenants.

E.g. faucet repair, light bulb, HVAC filter. 

If the returns are looking better then that, then as Walter White said, "then maybe your best course would be to tread lightly." :)

@Wei Cho is an expert in this and perhaps could shed some light on the first question.With regards to the market value it depends because the appraiser has to substantiate the value add as determined by comps that have recently sold with visable ADU's as well.

Trent, My grandmother once taught me: "warning comes before destruction." 

B. have an attorney send a letter, and warn her of the consequences.We have gone to the General Court and got the forms for eviction.