I’m pretty sure at $700 per person he is making around $200+ after paying every utility and the Mortgage.

Keep shopping. rent a backhoe and do the digging yourself.......Lol all fun and games until someone who's never ran a backhoe a day in their life ends up punching a hole in the side of their building or hits a underground utility line because they didn't have the property marked out.  

, and How will you fund the deal and what will your holding costs be total (interest on money, total time for project completion, insurance, utilities, taxes, etc.)? 

If you remove debt service and utility expenses, you are showing $447 per month or 12% of total rents. 

Due to current family situation, moving and house hacking isn’t possible, so that’s out.For those much more experienced and wiser than I am, do you think it would be better to still focus on my local market (considering I know the area and local economy, can do some of the work myself to save cash on a rehab and can utilize local and existing relationships) and find a way to create cash-flowing deals to achieve my goal, or look for a cheaper market with a lower cost-barrier to entry where cash flow is already more prevalent?

Make a list of all of the utilities and minus these ‘repairs’ off the offer price.

I am hoping to get some recommendations on the following:Option 1 - do not change anything for 3-4 months until there is an established relationship with the tenantsOption 2- immediately impose at least a $30-$40/month increase mainly to address the utility costs and leave tenants on a month to month.Option 3 - again, wait for a couple of months and stagger rent increases ($50-$60) to the tenants which will still be well below market rents.Certainly open to any other recommendations.

Anyway I have about $135k available on my heloc. sale price on the duplex is $279,000, so 20% is about $56k. the house is perfectly livable as-is, but at $60/sqft and properties on the block selling for $140/sqft i think there is room for some forced appreciation. the building is currently a three-floor duplex townhouse, one unit is the ground floor and unit two is the top two floors. all floors are basically the same floor plan. the second floor has a kitchen/laundry stacked above the first floor kitchen/laundry. on the third floor, the room is in the same place and empty, but utilities (water gas electric) are already run and in place for adding a third kitchen/laundry, so conversion to triplex would be simple as installing cabinets and appliances and building an exterior staircase up to the second floor rear deck. the three 2bed/1bath units would rent for $1000-$1200 a month each, conservatively. we would have to find somewhere else to live for that to happen, but that is our 1-3 year goal anyway. would it be better to make the bank loan smaller with a bigger down payment from the HELOC?

I’m debating on selling my rental property (4plex) and utilizing a 1031 exchange to funnel the proceeds into a larger property (10+ units) to scale my portfolio, and retain some of the proceeds from the sale for future use.

Up until this point I have exclusively been driving for dollars, as the sun now sets here in Memphis around 5 pm, I need to learn to utilize other tools.