He abandoned trying to scale.Learning from this experience when my partner and I decided we wanted to double our net income, we realized it would take a increase of 2 1/2 time our volume and probably need to triple our deal flow.  

You already mentioned Mid term, which can be a great way to increase cash flow.

How are the sellers being protected, in the event things change, vacancies increase and mortgages can't be paid? 

Who cares about lifetime interest costs, except to the extent you can easily lower them (refinance to a lower interest rate) to increase your cashflow.

Cheap money and low rates produce euphoria, which increases flow of money to an asset, which pushes up the price to uninvestable levels.I think it's going to get worse than better in the short term.Gino

They've increased the price several times in the last few years. 

You can find SF properties that already have in law suites, garage units, etc, and now legally rent those, so it should increase the appraised value significantly.

The property manager should be involved before you buy any property to give input on due diligence, how to increase income and reduce expenses, and to make repairs or improvements to maximize occupancy.Excellent property management is critical to your success before, during, and when planning to sell or refinance.To your success!

The first couple is a no-brainer.The second group has too many people, increasing wear-and-tear on the home.

Is it best to simply increase rent by a fixed amount (e.g., $700) to cover this, or are there other strategies for handling utilities in this situation?