While a percentage set aside for repairs and maintenance doesn’t mean you’ll necessarily have enough stashed away for this expense it would certainly lessen the blow of the expenditure.

The issue with doing this method is it takes more money up front for the renovations, you are buying older properties which may have more needed capital expenditures, and it takes more time and energy.

Without actually running numbers, you'll probably need to get closer to 600k to break even from a cash flow perspective (this all assumes 20% down).As others have said, you aren't considering saving for capital expenditures or vacancy and the maintenance is far below what I would budget.

But, as others have said, cash flow in this environment is tough and for new investors, they can be baited into cash flow now which means more difficult tenants, lower C to D areas, and expectant capital expenditures.

Some of the main reasons are that operating expenses, acquisition costs, and capital expenditures take a substantial amount of any would-be profits.

Capital Expenditures (10-15% of Income)Rule of Thumb: Reserve 10-15% of your income for capital expenditures (CapEx) like roof replacement, HVAC systems, or major renovations.Why: Regularly contributing to a CapEx fund ensures you have the cash on hand for significant improvements or replacements, preserving the value of your properties.5.

The expenditures occur long before any income.  

This is really extreme for such a tight time frame... and cost us about $45,000 in capital expenditures.  

What my accountant did is, she declared most of these as Capital Expenditures, then she turned around and depreciated them in one year per the 2017 tax cuts and jobs act.  

Like many (most) businesses it requires an investment of capital; money expenditure for ongoing marketing; management of operating, marketing and professional personnel; keeping accounting records and filing tax returns; established sales practices; constant monitoring of goals, budgets, and productivity; establishment and implementation of operational systems; and providing customer service.