Most of the big speculative money that is buying at these 3.5-4 caps are waiting for the rents to increase over the next few years. 

(can dwelling be stepped up to $2.9M, increasing depreciation expense to $105k per annum over 27.5 year asset life?)

Even with competitive lending terms and rates this process will understandably create a significant reduction in cash flow and increase the loan to value percentage for the current portfolio of properties.

Oftentimes the seller will base the price on current rents and depending how far below market they are you can get a unit that is renting for $1100 that should be renting for $2000 to live in by paying the extra $15,000-$20,000 in relocation assistance, which if you treat it like an increase in purchase price is a pretty good deal. 

It's not an exact match to your situation, but it has similarities, and I think you'd see tenants just as happy with baseboard heat that could increase the temperature ~10-15 degrees as you would with completely separate furnaces, with a MUCH lower upfront cost.I think the main thing to consider is how long you're planning on holding the property.

At first i thought i was over estimating but as i look more and more there are less and less apartments available for rent and the absolute cheapest ive been able to find a 2 bedroom for from hillsboro to pittsfield is 900/month and there is very very little available to rent in these areas the only ones i can find and they are not luxury apartments hell they arent even updated apartments and they are going for 1200-1300/month, i found a couple 4 units around 150-160k that are at full occupancy renting for 975/month i believe rent can be increased in these properties to at least 1k/mo which would be 3k income for 3 apartments same plan as my original post with a slightly higher mortgage payment.

But once the trend gains momentum and there are new restaurants opening up the positive dynamic in the housing market will increase.

You can find value but if you are only buying one property you increase your risk. 

However, are there any issues with zoning when increasing the # of units from 4 to 5 since 5 is officially commercial?

She's exceptionally good though, so in the next couple of weeks I'll increase her tasks to training a new cold caller and possibly accepting all of my incoming calls.