Of course, at the same time, I do another calculation to place all my expected cash expenditures and make sure there are no deficiencies.

But, I do know that the amount you can depreciate is the LOWER, of COST, or MARKET.So, it's what you PAID in, not what the insurance company says to replace it.I've always broken my rehab costs into CAPITAL EXPENDITURES which must be capialized and depreciated, and REPAIR EXPENSES which can be expensed in the year you pay them.

Does the 45-50% include a sinking fund that is funded regularly out of rents to pay for future capital expenditures?

." :-) Based on the $7 expenditure at Micky D's this landlord is eating alone.

@Luke MooreI haven't checked out the rental calculator yet, but the more I'm thinking about this, the more I'm questioning that extra 10% for capital expenditures.

You will still need to have a reserve for large capital expenditures like roof, boiler, etc depending on the size of the building.

But, monthly warranty expenditures might have made it a wash. 

If they're well taken care of, capital expenditures are hopefully close to none.

How is the expenditure going to be split between the two of you?  

Typical expenses of a property are: taxes, utilities, maintenance expenses, capital expenditures (big ticket items like roof, boiler replacement, etc.) and insurance.