Based on your rent range and your total expenses, I'd say you've got some slim margins if the expenses include what I've mentioned.  

You just have to buy it at the right price and know conservatively what you could rent it out for and to whom for safe margins.

So I’m at 88k minis another 12k for selling costs so that’s (assuming ARV of 120k) a gross margin of 20k before I make any repairs.

It sounds like a small job with little margin for them.3.

Even if you set all the cash-flow aside, it would take a year just to build up a $2,000 reserve which isn't enough to replace the carpet in one unit and that doesn't cover cleaning, other repairs, vacancy, etc.I don't know enough to make the decision for you but the margins seem really thin based on what you've shared.

Honestly it is a pretty thankless job with tight margins which is why it is hard to find good ones.

Is it better to use quality products or take the cheapest option to increase margins?

Don't get married to a deal and be ready to walk if there's a big margin between appraisal and offer. 

Too much can go wrong with slim margin for error at $90 per month.

Find something with better margins!