- being able to use projected rents when purchasing a multifamily to be able to qualify- ability to convert properties and increase or decrease units@Abel Curiel - you are correct - rates tend to be higher- normally 1/4 to 3/4% higher depending on factors and timing. 

From a financing perspective, I guess it is more difficult to borrow from banks against self storage facility to increase leverage, as compared to borrowing against residential rental property. 

@Surendra Chawla and @Anand Krish I've owned a couple houses in Queen Creek thru the downturn of '08 and the rents increased because of heavy demand for nice SFR homes in the area. 

What you've got to figure out if if this increased tax bill will be more or less than the higher payment over time on a mortgage at 7% or 9%.- Income from sources that can't be used as mortgage-qualifying income can of course certainly be used as assets for additional down payment.

forced appreciation is an artificial increase in value realized when the property is sold; there are a number of things you can do to improve the property,  new appliances and services for tenants,  obtain an upgraded appraisal, increase rents, upgrade tenants, and coin service laundry machines. 

Most of the big speculative money that is buying at these 3.5-4 caps are waiting for the rents to increase over the next few years. 

(can dwelling be stepped up to $2.9M, increasing depreciation expense to $105k per annum over 27.5 year asset life?)

Even with competitive lending terms and rates this process will understandably create a significant reduction in cash flow and increase the loan to value percentage for the current portfolio of properties.

Oftentimes the seller will base the price on current rents and depending how far below market they are you can get a unit that is renting for $1100 that should be renting for $2000 to live in by paying the extra $15,000-$20,000 in relocation assistance, which if you treat it like an increase in purchase price is a pretty good deal. 

It's not an exact match to your situation, but it has similarities, and I think you'd see tenants just as happy with baseboard heat that could increase the temperature ~10-15 degrees as you would with completely separate furnaces, with a MUCH lower upfront cost.I think the main thing to consider is how long you're planning on holding the property.