Purchase Price was $72k.The report reads as follows:Infestation 4- Excessive moisture conditions; wood moisture 23% in left and right front quadrant; 20% center.

Expenses in excess of the limit can be claimed only as an itemized deduction on Form 1040, Schedule A."

After thousands and thousands of dollars lost on make-ready and other types of repairs as well as time (money) lost on excessive turnaround time frames, I don’t believe that any longer.

Your first line of defense against loss is going to be insurance on the property, then an umbrella or excess-lines policy on the company. 

Definitely use separate accounts, whether you have an LLC or not.Checking: receive rent, pay billsSavings: hold deposit and reserves for capex, maintenance, taxes, insurance, etc.When your checking account has more money than is necessary to pay bills, transfer the excess to the Savings account where you can build funds for a new investment.

Not excessively. 

As previously pointed out, you then loose all leverage.

Do we leave that excess in the account after paying the mortgage?

I routinely get disappointed by lenders but I never loose site of the value they provide.

It appears to me that you are being excessively conservative in your time periods per capital expense.