Rents have increased $150 per unit.

I'm thinking 20-30 units, and most of them are value-add for occupancy and increasing rents.

I believe the tenants in this area would prefer a/c but I am not sure if this would return an increase in rent enough to offset the additional cost of adding itI would appreciate any input from some who may have had to make a similar decision or is familiar with the area and the rents

The apartment complex might offer good cash flow, but also the potential to increase the value of the property through increasing the NOI.

I would also budget for increased cost of goods/services in the future.

m=9&y=17&utm_source=HAR%2FMLS+Master+List&utm_campaign=37e6c93251-January+2017+MLS+Release&utm_medium=email&utm_term=0_5c0a7c027d-37e6c93251-252424337Houston Real Estate Highlights in August, 2017: Hurricane Harvey ended ten consecutive months of positive single-family home sales, as volume plunged 25.4 percent year-over-year with 5,917 units sold;Despite Harvey’s rampage, single-family home sales remain 1.8 percent ahead of the 2016 volume on a year-to-date basis;Total property sales dropped 24.2 percent with 7,077 units sold;Total dollar volume fell 22.2 percent to $2.0 billion;The single-family home median price rose 3.0 percent to $231,700;The single-family home average price increased 2.6 percent to $296,418;Single-family homes months of inventory grew to a 4.4-months supply, but is expected to shrink with strong consumer demand for housing in the wake of Harvey;Townhome/condominium sales dropped 31.4 percent, with the average price down 1.1 percent to $196,230 and the median price up 2.0 percent to $159,000;Leases of single-family homes rose 9.4 percent with average rent unchanged at $1,857;Volume of townhome/condominium leases jumped 17.0 percent with average rent down 2.2 percent to $1,551;HAR continues to encourage anyone who has housing available for temporary occupancy (up to 12 weeks) to please post it on our Harvey Temporary Housing page as soon as possible at www.har.com/temporaryhousing to provide housing to those in need.

The key is simply act ethically and professionally in everything you do, disclose anything that needs to be disclosed, and hold yourself to a higher standard than even the public would hold you to, and you will be fine. 

Is it below market rate so you can increase rents and thus increase the value of the property?

I would personally then use the 40-50k to increase my buying power using Hard Money/ Angel Funds/Etc. 

@Kevin RodriguezYou could also increase the rate a little, do lender paid MI so it doesn't show up as a separate  component of your monthly payment and then get a better deduction on your income taxes.Stephanie