Do I try to gradually get him to $700 a month with a 3-5% increase each year?

Looks like I increase the down payment and the initial interest rate, but certainly don't want to pay 10% after that either.

Anyway, my property assessment increased almost 40% from the last assessment (house was completely renovated), but is still $65k under the closing price.

None of the 3 families meet my screening criteria and all 3 rents are under market value.However, there is nothing I can do until their leases are up.I plan to incrementally increase the rents over two years to get them up where they should be. 

The CPA you spoke to was right, there are tremendous tax benefits for what the IRS calls "real estate professionals" The basic criteria is twofold: 1) you must engage more that half of your 'working' time in real estate related activities. 2) You must spend at least 750 hours involved in RE.What is considered real estate involvement?

On the flip side, each new hand that touches the deal or the loan, increases the likelihood of a mistake. 

I would also check your comps in rent say go back over the last 5 years and I would bet you are seeing over time increases to your rent in your area due to growth?

If it is not, and the listing agent engages in it, that would be illegal, and he would be subject to disciplinary actions and fines. 

According to our data, rent costs have increased by 34% from 2012 – 2016, a sign of strong demand for rental units.Another sign for optimism in the Aurora real estate market is the rising home values.

My monthly payment will increase another 600/month but I would build about 15k/year equity as opposed to 4k/year.