My wife and I were making HH income of $160-190k in an average COL market (variable based on my bonus and her self-employment income which has increased from 45k to 60k over her first two years and is on track for at least 60k again in 2018. 

If it is not and misrepresented or information accidentally omitted then the carrier can deny claims, adjust the policy premium for increased risk, or terminate the policy all together.    

I would not convert basement into a 5th Bedroom unless it adds a significant increase to income. 

Besides attending to the myriad of questions, requests, and issues with tenants and the property, a good PM will provide liability protection with legal knowledge, asset protection with a tight lease, and increased ROI with simply smart management. 

I would also post to any public listing site you can to increase your exposure.

I am currently doing a rehab on a foreclosure. 1300 sqft SFR. The plumbing on this house is all old galvanized pipes. I got two quotes from plumbers which one is to replace the whole thing with PEX and doing drainage,...

We then get billed that $4100 balance.Something was up, we didn't just increase our monthly water consumption by 4,000% all willy nilly. 

Once your credit is stable and you begin to increase your income and savings THEN worry about real estate (or perhaps invest some money in index funds/stocks to begin as well).

By doing this, I figure I can significantly increase my ROI. 

If the 165 ARV is based on the bad layout, you could compare the cost of a floor plan change to how much it would increase the ARV.