Years ago I had a guy call for a refinance on his house he bought it or 500k and put 200k into his back yard and interior so when I asked how much it was worth he said $700k, I explaned that's not how it works the appraisal come in at 560k...Hard money some let you go off "ARV" after repair value but the rates reflect the leniency.

Commercial long term leases generally have rent escalations built into them, at a minimum at a rate that reflects expected inflation. 

Driving for dollars for multi-family might be a little different since the condition of the property isn't necessarily a reflection of the owner's financial situation.

Other than I’m sure the rate for such a loan would be relatively high to reflect the risk of such a loan. 

We will use a management company to manage it and are taking that into account in our calculations.I wanted to ask others if the higher cap rates (assuming they are correct) are reflecting a greater perceived risk with the commercial.  

Correct it is not standard to include the W/D but it is appreciated and reflected in rent.

I have also updated my profile to reflect my location and goals.

Hey BP family, I was sitting here reflecting on my 2 year REI journey and wanted to share a few thoughts. 

Do the cash flow numbers you listed reflect reserves, vacancies and other costs (like water bill)? 

Bottom line, adjust your purchase price to reflect the condition of the property.