Of course none of this was legal or documented in anyway, but I still produced a cash flow of about 400 dollars a month and even managed to sell "the rights of the name Sebass' Brownies" to a younger student for a tiny amount of cash when I graduated.

I remember as a traditional student in business the Gale publications allowed people to purchase their directory for different purposes (starting or expanding one's business). 

There is a heavy student base here, just have to make sure you find the right team to handle those student rentals.

It is most common in student rentals.

Comps in your area are going to dictate 90% of the value of your house- you can "add" based on some things that are "better" at your house, but some of them don't really make that big of a difference to many potential buyers......The house is worth what someone will pay for it....bottom line...... and we ALL tend to think our possessions are worth more than they really are..... that's human nature since we have an emotional connection to them.

I have 4 friends and we want to pool our resources together and purchase rental properties in the city we all went to college together in (focused on student housing).

I assume this is a student rental?  

Whether the existing tenants would pass your qualifications or not doesn't really matter, they're already in possession of the units.

I need to pay off $40,000 government student loans badly!

Great start already with your savings and goals...Your situation really lends itself well to a buy and hold student rental situation.For example, you have to live someplace anyway.