Use it as a safety net for unexpected expenses.On your first property, you can't spread the cost of capital expenditures over multiple properties, so when/if something happens, you need to be ready. 

@David JenkinsCap Rate = Net Operating Income (NOI) / Price of the PropertyNOI = Annual Income - Operating Expenses NOI does not take into consideration debt service, capital expenditures, or depreciation,  Example:  Price $1M, Annual Income $200K, Operating Expenses $100KCap Rate = ($200,000 - $100,000) / $1,000,000 = 10%

The rents may cover the mortgage payment, but I wouldn't think you'd be able to cover maintenance, capital expenditures, vacancy, and property management.

However, if you did pay off your two properties in a couple years, then in that third year you would have something like this in extra income: $1350+$1595= $2,945 * .6 (assuming 40 expenditures - taxes, insurance, capex, etc.) = $1,767 x 12 months = $21,204.  

If I am super confident on the cash flow after expenditures (loan repayment, cap-ex, vacancy, maintenance), I don't think that the refinance will be too difficult to obtain.Good luck with the BRRR strategy and thanks again for the advice.

Capital Expenditure allowance (replacing the roof, water heater...), and Property management.

I hope that the reserve fund starts to grow real fast, because they are going to have to plan for roof replacements, heating systems, windows, doors and other capital expenditures just around 2040 when the developer leaves. 

Also, I have two capital expenditures that added value to the home, a $2800 driveway widening and a $3000 deck/pergola in the back yard.

The key is to find properties that have good cash-flow after your expenditures, management fees, etc.

The return on investment would not justify the expenditures.