So yes if you manage yourself they can make a bit more but you are also laying for utilities, furnishings and any time a sofa is broken or a TV is stolen you have to replace it and is a sunk cost. 

Shouldn't have any utility expense.

Everything got water on- drywall, carpet etc, utility room, everything.

. - Are all utilities split for each apartment?

Parking, noise, use of utilities, density, beauty/style, are only a few of the considerations when a conditional use permit or zoning variance is granted.  

Were the utilities on or off when you went through there?

I also want to separate the water heater for the units to increase cash flow by not paying for utilities.

or would it be better to back billed the tenants for the utilities every month? 

It's funny they mentioned IPS submitting this utility information; yeah good luck with that one.

I'm trying to structure a deal utilizing seller financing.