That process doesn't work if you buy a nice house with a maximum LTV conventional loan because you've done nothing to increase the value.

I may pay more up front, but everything is updated and I am financing it over 30 years, so it is just increasing my monthly payment.

Larger buildings have fire alarms and sprinkler systems; fire walls; wider hallways and stairwells with double exits, etc ... all measures to increase the available window to exit a building in the event of a fire.

Dead equity is doing nothing to increase your income.

@Joe Lambert That makes me think that the rents I have been using for the area are too low and I could increase my rent estimates.

My friend converted stuff to gas on the main house to increase Amps in the panel.

I currently own a duplex that I am house hacking, however, I would like this next deal to be in a better neighborhood to attract higher quality tenants.

The only attraction I can see, the lien holder is guaranteed a total  minimum interest of 5%, ie. if they bid the rate down to 2%, and the lien gets paid off in a few months, the certificate holder still gets a minimum of 5%. 

It doesn't really seem to be scaring people away but rather attracting people.

Can I raise rents immediately or should I rehab to a certain degree to justify the rent increase.