And interest rates right now with the Fed increasing again will be in the 6's or so. 

NY state law will tell you how far in advance you have to provide written notice of an increase in rent....usually 60 days in many states, some are 30 days....then the debate will be do you do it all in one big jump or small increments as not to shock the current tenants enough to leave...... that's a debate on here in many posts

My only options would be to 1) keep the basement strictly as storage or 2) go through the process of getting a CO and deal with the potential tax increase on an already high tax property.

Inform the prospective tenant that due to the amount of people your going to anticipate a higher water bill and would have to increase the rent ( what ever you deem reasonable) .

The good thing about these criteria is that they are mostly static as opposed to often changing.Population: Look for population to be steadily growing = increasing customers.Jobs: A stable job market = a stable tenant base.Supply: Too much product = increase in concessions / decrease in rental income to attract solid, long term tenants.Demand: Product type.

I am quickly realizing it's difficult to find 1) properties which meet the 1% test, and 2) properties which cash flow positive from year 1 (unless we increase our down payment from 3.5% to something much higher).I would like to get two pieces of advice from the Bigger Pockets community in Massachusetts.

Total monthly payment (assuming taxes and insurance are included): $2205 + $417 = $2622Lease amount: $200075% of Lease: $1500$1500 - $2622 = ($1,122)That's an extra $1,122 per month that will be counted against you just like an extra monthly payment.With a monthly salary of about $7000 and great credit, there's a good chance you will qualify for a monthly payment @ 50% DTI, or $3500 / month. 

Do I list in the Rental Increase letter "All terms from the previous rental agreement will remain in effect" if I have never seen such lease or terms?

Here are more $$ details:Buy and Hold:Yonkers 4 unit multi-family house (5 minutes to Metro North station)Monthly expenses: $5kCurrent rent roll: $6k (can be increased with more renovated units, and current landlord keeps rents low to keep tenants)Renovate and Flip:Brooklyn (Bed Stuy/Bushwick) Condo 2 Bed 1 Bath 850 SQFT- 5 minutes to J/M train station$500k Purchase priceMonthly expenses: $3.2kEstimate monthly rent: $2.2k, $2.5k renovatedThank you all for your time and input!

Here are more $$ details:Buy and Hold:Yonkers 4 unit multi-family house (5 minutes to Metro North station)Monthly expenses: $5kCurrent rent roll: $6k (can be increased with more renovated units, and current landlord keeps rents low to keep tenants)Renovate and Flip:Brooklyn (Bed Stuy/Bushwick) Condo 2 Bed 1 Bath 850 SQFT- 5 minutes to J/M train station$500k Purchase priceMonthly expenses: $3.2kEstimate monthly rent: $2.2k, $2.5k renovatedThank you all for your time and input!