Some 8 Cap buildings can generate high cash flow and high DSR while other will be lower DSR and less cash-flow. 

It has been under contract twice and then fallen through, with the listing price lowered once about six weeks ago.

Account Closed , Sounds like a good idea PROVIDED you can build them at the right price.First i would suggest you talk to Drafts man or Architect to figure out the $ cost per sqf in your area. more often then not building from the ground up is more expensive them buying existing building. and the RETURN ON COST including the land, will be much lower.

What that'll get you in the Cleveland area right now is a lower C-D class duplex or a lower C class single family home.

Every time I calculate cap rate using ACTUAL income and expense, it is always lower than the MLS listed cap rate.

You can afford to invest in fixer uppers or even negotiate a lower price since you can put a larger down-payment but that all depends on where you are investing. 

I can find it in SFR's in the lower rated school districts, otherwise it's tough.  

But also where the tenants pay their own electric, if I give them a benefit of lower electric bill with a slight rent increase to offset it, would that be good?

Comparing these terms to the best financing I've found through a bank ($320k loan, 5.5% fixed for 10 years then refinance, amortized over 25), with same purchase price and down payment, results in a lower monthly payment by $315/mo, plus my principal balance after 10 years of payments through bank financing would be $240,000, compared to the $180,000 balloon that the seller wants at year 10. 

Sometimes you can just offer lower rent or possibly no down payment.