Assuming the condition of the unit allows, am I allowed to raise more than 8% (5% +2 ~ 3% index) and straight to market rent?

Next time be pickier with the neighborhood and the condition of the house - and never trust the realtor to collect security deposits from the seller if buying with tenants already in place Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Its about the right size / type / condition for the property I would like to find to upgrade from the duplex I sold in 2019,   and from my research,  it is likely that the ownership are getting to the point in their tenure where selling might be on their minds.Given the building's likely income/expense numbers  (I own a nearby, similar style/quality property I can extrapolate from) I can make an educated guess to its value and given that value range I can afford it without excess leverage.   

We went in $60k under asking close in 30 days, no conditions & we got it.Did some rehab & the cash flow is now exceptional, with nothing under $800/month.

Purchase price up to 200k, condition of the house would have to be turn key or close to it since we plan on moving in June.

She knew the week spots that properties in the area may have - wet basements, aging systems, condition of the brick building, water pressure, and state of the electrical system. 

-It is priced comparable to rentals in the same area, and in better condition than some listed for the same price, much better condition.

But the truth is he knew exactly what that property was worth in that condition, and that’s exactly what he got paid for.

What’s the condition of the units?

@Christopher Dolan ultimately that decision is up to you, but I would start by conducting a survey of all other rentals on the market and figure out where your rental fits in based on condition, quality and location.