I ran very conservative numbers and think I could transfer the water/sewage to the tenants, increasing my return.

If it fits your plan do it...Look for alternative or creative ways to increase your cash flow or minimize your expenses.

At this point my partner's equity would get a little smaller each month compared to mine as I put all my profits towards the faster pay down but they would still be making enough to live comfortably until the 1st property was completely payed off in year 10 and cash flow increased from ~$120k to ~$228k.

@Allie Dattilio -- We are in the exact same situation here in Cincinnati, getting the HELOC squared away first, actually it will be a HELOC increase through our credit union, then working with a mortgage broker to get the pre-approval in place.

Hopefuly it will increase the rent by $200 at least.

That's $16000 in capex over 30 years, which is roughly $50 per month (I would go $75 to account for price increases and other misc. items like siding, windows, driveway, etc...)

I'm surprised that more investors don't look into student housing like this where they can charge by the room and increase their profitability like you're talking about. 

Population actually decreased, but incomes greatly increased and so did housing prices.

Sometimes it makes societal sense to raise rents slowly rather than in a way that will force families to relocate.If the unit has been rented significantly under market for a number of years, the tenant won't be surprised by a rent increase with the change of ownership.

So we’re not talking a huge rental increase from renovation but still my preference to upgrade and update.