After two years of appreciation we would easily be in the black.

One can get lost in the minutiae really easily.

The property I'm referring to has been meticulously maintained, no mortgage, owner was wealthy and recently passed away in his 80's and now the kids are in charge of selling and want to maximize the sales price on the MLS so it's not a one on one negotiation.It's a 16 unit with average rents at $400/month and market rate is $800-$895.Let's assume all cash purchase so mortgage payment isn't a factor and use 50% rule for simplicity:$400×16×12 = $76,800 gross rents50% rule NOI = $38,400At $1,000,000 asking price the cap rate would be 3.8%If you can easily increase rents to market at $850/unit:$850×16×12 = $163,200 gross rents50% rule NOI = $81,600At $1,000,000 asking price the cap rate would be 8.2%If comps are selling at a 7% cap rate the sales price of this property could sell anywhere between $548,571 using actual NOI and $1,165,714 using market rate NOI.Clearly you shouldn't pay $1,165,714 based on unrealized potential, but it's also clear that the sellers would not entertain $548,571.

I made the qualification  4x rent because the utilities for the house usually run $280/mo to $400/mo and I thought that if a household only makes $2250/mo (3x rent) in gross income, then their rent plus utilities could easily be more than 50% of their net income. 

Nothing about the property has changed, and youve just been explained very easily why the 2 different sq footage numbers.

You can easily get an idea of how much you should be setting aside for repairs and renovations and be able to anticipate when a big expense will occur. 

Most property management contracts put the tenant selection process in the hands of the property manager and can easily leave you out of the process.

For instance, I sometimes look to buy properties that have a "weird" floorplan that turn other buyers off, but which I know I can easily fix to force appreciation and/or rent--that might be THE deciding factor in whether I buy the property, but there isn't ANY data representing that factor!

One bonus about you paying the internet and owning the equipment is you can more easily add security cameras and/or a security system to the router/modem as the tenant won't be taking the modem/router when they move out as you will be owning that equipment. 

Poking around online we should be able to build onto (second story) the property and “easily” permit as a duplex.