I initially analyzed with the following information and the property yielded a ~$420/mo cash flow and a ~15.7% cash on cash return:Purchase price: $121,200Closing cost: $7,800Loan: I am putting 20% down for a 30 year loan at 3.625%Estimated Rent: $1,400 Property tax: $135/moInsurance: $54/mo(Assuming 5% Vacancy, Repairs/Maintenance, Capital Expenditures and 10% for a Property Manager)At first, this property seemed good on paper until the inspector said that the AC, furnace, water heater, and roof are at the end of their life and will need to be replaced in the near term.

Some area's the rental income is as low as 0.6% - 0.8% of value and if you do the due diligence there is not enough in the rent to set aside for keeping you at the recommended minimum 50% expenditures.

You should have in your expenses / P&L a line item for R&M (Repair and Maintenance -- basically toilets fill valve, A/C filters, dishwasher repair, etc.) and another for CapEx (Capital Expenditures - New Roof, New Water Heater, New Carpet, etc. 

I’m out of the vents are higher on the property, are you plan on keeping reserve for capital expenditures.

Andrew,The safe recommendation is to set aside approximately 50% of the income to cover vacancies, maintenance/capital expenditures, taxes and insurance, etc.

And make sure to account for the following expenses:1) Mortgage2) Mortgage insurance (PMI or MIP) or FHA Risk base3) Property Taxes4) City Taxes5) HOA (Home Owner’s Association) Dues and Fees and Assessments6) Insurance   a) Property Hazard Insurance (0.3-0.45%)   b) Flood Insurance   c) Earthquake Insurance   d) Umbrella Insurance7) Vacancy Rate (usually 8% - the equivalent to one month a year, or 5-6% if multifamily and/or if experienced, if not use 8%)8) Utilities (you’ll have these if your tenant is not covering them and/or during vacancy)   a) Water § Sewer § Garbage   b) Electricity   c) Natural Gas   d) Propane9) General Maintenance (usually 5%)   a) Upkeep § Landscaping   b) Snow removal   c) Repairs   d) New Appliances   e) Make ready10) Capital Expenditures (usually 5%, higher is the property is old and obsolete, less if fully rehabbed and all mechanicals and roof are new)11) Property Management (8%, even if you self manage, your time still has value and there might be a time when you'll want to be completely hands off or you'll not be able to do it, vacation, retirement, etc.), including...  

Have you accounted for vacancy, repairs, and capex(capital expenditures).

I often find myself recommending systems that landlords use like budgeting for repairs and maintenance and setting aside monthly future capex expenditures for when they need a new roof or HVAC, etc.

Just make sure you keep enough in there for expenditures. 

CoC return is your cash flow divided by the down payment, closing costs, rehab, and any other expenditures to acquire and get the property ready for rent.