The key part that I was unaware of are the overall rent caps, which obviously are well, well, well below market rents for the area (it's actually in Mtn Brook, but same applies for Homewood). 

Low income housing is difficult. 

Please be aware that separate Baltimore County law prohibits more than two unrelated adults from living together unless the unit is authorized by the county as a rooming or boarding house.I thought the rule was the you can have more than two unrelated adults if you just register your house as a rental unit.Do you have any details on how difficult it would be to get a house authorized as a rooming/boarding house for college students or is it pretty much impossible to do?

You can check it against cap rates and per unit prices. 

All cities are difficult, but if these are located in Guthrie be prepared for additional hoops.

If we were to rent out the front house that we currently live in, I would estimate it to be about $3500 or more for it, since it was remodeled, and it looks great.Analysis:So I did the math (high level) using 2 different scenarios.Scenario 1: If both the houses were rented.Property/Deal ProfileGeneral GuidelinesPurchase Price700,0001 Percent Rule (%)0.857142857Down Payment (%)3.50%50 Percent Rule3000Down Payment ($)24500Cap Rate8.214857143Interest4%Cash-on-Cash Return26.73744578Term (years)30Loan amount687,321IncomeCash FlowRental Income 12500Total Monthly Income6000Rental Income 23500Total Monthly Expenses5075.33Laundry IncomeStorage IncomeMisc IncomeTotal Monthly Cash Flow924.67Total Monthly Income6,000Total Annual Cash Flow11096.04ExpensesCash-on-Cash ReturnTaxes750Down Payment24500Insurance58Closing Costs0Water/SewerRehab Budget30000GarbageMisc Other-13000ElectricGasTotal Investment41500HOA FeesLawn/SnowVacancy200Repairs200CapExProperty Mgmt.Mortgage Insurance Premium586.33Mortgage3281Total Monthly Expenses5,075.33Cash-on-Cash Return26.73744578 Based on the above analysis, here are the key takeaways – 1)The property cash flows - $924/month 2)Cash on cash return is 26% which is pretty good in LA I reckon.3)The main thing I would like to note is the solid Cap Rate of 8.2Scenario 2: The actual scenario with only one rental income since we moved into the front house.Property/Deal ProfileGeneral GuidelinesPurchase Price700,0001 Percent Rule (%)0.357142857Down Payment (%)3.50%50 Percent Rule1250Down Payment ($)24500Cap Rate2.214857143Interest4%Cash-on-Cash Return-74.46737349Term (years)30Loan Amount687321IncomeCash FlowRental Income 12500Total Monthly Income2500Rental Income 20Total Monthly Expenses5075.33Laundry IncomeStorage IncomeMisc IncomeTotal Monthly Cash Flow-2575.33Total Monthly Income2500Total Annual Cash Flow-30903.96ExpensesCash-on-Cash ReturnTaxes750Down Payment24500Insurance58Closing Costs0Water/SewerRehab Budget30000GarbageMisc Other-13000ElectricGasTotal Investment41500HOA FeesLawn/SnowVacancy200Repairs200CapExProperty Mgmt.Mortgage Insurance Premium586.33Mortgage3281Total Monthly Expenses5075.33Cash-on-Cash Return-74.46737349In the actual scenario, I am paying $2575 every month towards the house.

Getting up and running can be difficult because, in a lot of places, no one will take the time to help you are share what they know or their stuff.

What makes it more difficult is that most of the 2-3 units that have been sold in the area have the potential of being converted into single family homes that can sell at about 1million, or can be duplexed down or up to attract a buyer looking for more luxurious units.  

I would say it needs to be higher cap rate become of that mix.As mentioned, make sure it’s allowed activity with the city.And check what work would need to be done to reinstate the bottom units back to apartments.  

Doesn’t make sense that an investor with more than 4 properties is capped out with favorable rates and terms.