Then we will take a hit if the market doesn't go up.Right now they rent out for about $690 per month each, but with about 5k in capital expenditures, we could get at least $725.

So I'm not anticipating a big expenditure soon, but there is always the unforeseen.I've had 2 properties involved in car accidents. 

I've owned the property for over a year but most of the capital expenditures are just now happening.

Likewise, you want to have enough cash flow to cover possible capital expenditures like hvac, roofs, etc. that cost more than say repainting a room.Calculate your total out of pocket cost, say for example, 10% down on $80k plus $4k for closing costs, inspections, etc and another $1k per unit repairs.

Also, I will be living in as an owner.Type: Duplex (True duplex, not mother-in-law)Units: 2Rent: $795 / SideSQ FT: 1100 / SideYear Built: 1924Mortgage Type: FHAPurchase Price: $150,000Down Payment: $5,250 (3.5% of Purchase Price)Mortgage Payment: $875 (includes PMI, estimate only)Interest Rate: 4.25%Term: 30 yearImmediate Capital expenditure: $3000Property Management: $159 (10% of gross rent)Insurance: (need estimate)Utilities (water / trash): (need estimate)Utilities (heat / cool / elect): paid by tenantTaxes: $119 / monthHOA: noneVacancy: 1 side currently rented (I will be living in other side)Note: Recently remodeled, requires minimal immediate attention.

However, they're forgetting unforeseen expenses like, vacancies, capital expenditures, repairs & maintenance, etc.

Didn't do any in-depth analysis, but I don't see any funds being set aside for future capital expenditures.

(In reality these units are actually already rented out)----------Using the 50% rule for a quick glance,$4,470 x 50% = $2,235 for expenses and $2,235 to pay the mortgage$2,235 - $977.90 = $1,257.10 (cash flow)$1,257.10 / 3 units = $419.03 cash flow / unit---------When I plugged this into the Rental Property Calculator I used these parameters -->Property Taxes: $7,000Points/Lender Charges: $0ARV: $0 (no renovations planned or needed)Electricity & Heat: $0 (Tenant Responsibility)Water: $100 (guess)Trash: $100 (guess)Property Insurance: $150 (guess)Vacancy Rate: 5% (guess)Repairs & Maintenance: 5%Capital Expenditures: 5%Management: 10%Future Assumptions: 2% (For all three)The Rental Property Calculator gave me expenses of around $3,000/m and cash flow of around $1,200/m, which was around what I got with the 50% rule.What am I missing?

BTW, I don't include property appreciation in any of my calculations because 1) it varies 2) it will likely be offset by capital expenditures, which also vary.

It is an average across large apartment complexes across the country and many use it as a starting point, a sniff test, for how solid a deal is.CAPEX is Capital Expenditures, your major repairs... things like the roof, HAV, hot water heater, appliances, etc.