Expect gradual increases. 

You should then ask the landlord how much he is charging for rent.If there is a big difference between the numbers - that is great because you can go in and increase rents when the lease expires.You should reach out to a lender to see if you can get financing on the deal.You should also reach out and get good figures for items like real estate taxes/home owners insurance etc.

The cons are that you will have force saved money in a manner that you cannot easily access to increase your net worth and income.

Times 2 years, and you'll be $3k short of your projected expenses.Now add into the mix the increase in costs from what you are using now to estimate your future CAPEX off of, and you won't have enough money...even if all goes well.Saving for CAPEX through your cash flow is a losing option.Let's just see what happens if you do have added costs, and vacancies per year:assume 1 month vacant and one month worth of added costs per year, and you would end up saving only around $4500 per year.That would put you $6k short of your 2 year estimate, and (assuming you will only have the 3 years after that) $1500 short at the 5 year mark.The HELOC is there waiting for you when you need it.

I was wondering how often do you increase rent, and what % do you usually increase it by.

gradually increasing rents?

Not to mention the improvements will result in a 200-250 a month increase in rent, reduced water use and electricity.

I noticed that the lender increased my mortgage insurance (MI) premium to almost double the original amount. 

While it may be too late to increase the rent for May, you should not have to wait a year. 

Even if you increase that 2nd unit from $750 to $1000, doesn't seem to cash flow that great after maintenance/vacancy (i used 15% in my modeling).my 2 cents. good luck!