Dear BP Community:We are buyers on a property where the appraiser unexpectedly appraised the property to be in Below Average Condition.

In my opinion you always have to plan for worst case "what if the contractor get's in a car accident?".

Its more predictable that "cash flow" which can be wiped out with one unexpected capital expenditure.

Fortunately for me, because I had a bunch of unexpected problems with contractors that has eaten up thousands.

If its a duplex, odds are in your favor that both units wont go vacant unexpectedly, however if its a single family and it goes vacant, I would tack on an extra month since you wont be getting any rental income. 

isn't the purpose of insurance to cover accidents/defects?

My mortgage to income (>40 of my income was going to my mortgage) would leave very little room for fun items or unexpected expenses. 

With any real estate investment, there are going to be unexpected capital expenditures at some point down the line and you have to be prepared.

I also know many of these same people lost everything, due to the behavior of a single tenant that is known as a "Professional Tenant," or maybe an inadvertent accident occurred.

However you would need to prove that you had some kind of unexpected life altering event like a job transfer to another state, etc.