At acquisition is probably your best bet, especially if it will command higher rent.  

@Steven Diebold Modular or pre-fab homes will command the same value as stick built or site built homes.

These units are commanding roughly $1000/sf with fairly basic finishes starts at $489,000 each.Does anyone have successful experience with converting these historical buildings into smaller units to maximize returns?

If my house is worth 600k,  I can command 6k rent? 

I've not met too many disorganized and unprofessional investors that owns properties that commands $8000 worth in move-in costs.But if you really want this property, I'd wait until the move-in date to sign the lease, and pay all move-in costs/first month's rent.

Instead of adding on incremental paid services perhaps look at incremental free services you can give them that way they stay longer and you can command a premium for rent. 

They can command the same rent, but 50% of the $100k value of the smaller house is in the land, while 80% of the house in the burbs is in the structure.  

Which would be most likely under 5% which really isn’t great when real estate should be commanding closer to 20% returns

The new construction are all commanding top dollar rents. 2/2's going for $1,450 and up.

From what I have seen,  Johnson City commands the highest rent out of the Tri-Cities Area on average.