How does one get increases when the other party can simply say "unacceptable due to our rent reasonableness test"For the record we took over the building with the section 8 tenants already in the units.

I know there are multiple variables, so here's the house in question: https://www.trulia.com/p/nj/cranford/42-hillcrest-...

We had to dig through multiple bags of trash that day to find it and return it -- not sure if we even got a 5-star for that.

The last several years we have had appreciation, in many markets this has been slowing down.For the people looking at larger deals - it will be about remaining conservative as you have but also making sure you test your numbers. 

Was told we "passed" the lender's test:  730 Credit scores,  plenty of $ for DP and reserves, years fo experience as RE Broker and PM, plus 2 rental properties and hx of BRRR.  2 weeks later, " the lender feels you do not have enough recent flip experience" and terms are up t 20% DP plus 4, not 2, points. 

I would say Annual operating costs have increased due to such things as property taxes and insurance.It much easier to do a 3% to 5% increase every year, than wait multiple years and then try and catch up.

Accept their notice and start marketing the unit and prepare for quick repairs and fast turnover.....let them go.You didn't screen them or accept them....no deposit (red flag)....below market rent (probably no increases in the 3 years)....and they are giving you their first test to see if you flinch....don't flinch.Yes its a business to make $$, but you also cant run a business out of fear....... the short term "pain" of vacancy can result in a long term benefit .

Makes more sense to me, give yourself multiple exit strategies and greater access to deals regardless of market conditions.

Now I know at first blush the town will say your zoned R-2 so you can't however when I see these other buildings with multiple units I ask myself well why them and not me?

@Don NelsonYes, many banks will cap you at 4 properties so it's a good idea to pull the HELOC on one of the first few if you plan on using it multiple times to acquire new property.