On top of that, you’ll want to budget for ongoing expenses like property taxes, insurance, operational costs (such as utilities and property management), and maintenance.

I can give you insight to their operation

They are also getting a seller's concession which will keep their acquisition costs down.The deal will cashflow from day 1 after debt service and ALL operating expenses. 

Unless apartments are just not as marketable, then a multifamily building is likely the most efficient for construction expense, operating expense, and rent/SF.With a building of only 12 units, I doubt you'll see any time-based advantage by phasing in duplexes.

(especially for those involved on this website)The reason I mention if it matters on this website is because most are real estate investors(long term buy and hold) and will most likely operate at a tax loss which doesn't have an impact on taxes.The second point is, will you invest or not invest in a good investment because of what your tax rate is?

But this includes flooring, painting walls and cabinets, and some basic upgrades occasionally even new appliances.

I am trying to figure out the fairest way to go out about this so we can have it written in the operating agreement.

Welcome Sasank, my name is Thomas and I operate out of the Phoenix area, would be happy to answer any questions you have about Arizona RE. 

Hey, MadheshwaranFellow short term rental owner/operator here. 

Further, if planned well, you can have lots of operating expense deduction.