I would agree with the earlier post to make it clear that you can only accept deposit as rent if there are no repairs or cleaning needed after she's moved out, but I have a feeling that waiving a deposit is also waiving your right to seek any reimbursement for any expenses after move out. 

The cost to repair it is close to the net annual income.

Also, any suggestions for ways to save money on the repair? 

I do recommend you stop accepting made-up excuses like family emergencies, car repairs, or whatever.

In the end this kept their payment the same, I pocketed more on a monthly basis (difference that manager had been stealing) and I have had someone make timely payments for 5 years with no repair expenses on my part.

Many reason I stay away from Condo's including:HOA regime feesUnexpected and expensive HOA assessment fees for upgrades or repairs that you may not agree with.RulesClose proximity to others that could cause disagreementsSaturation and competition on renting condo's ParkingI would personally never buy a condo for these reasons and look for a deal on a house.

That’s part of why I was reserving 10% of the rent for repairs and another 10% for CapX.

. - Understand the upside of the "rent by the room" strategy- Understand the upside of any repairs that can be made to the main unit. - Understand the cost/value of completing an ADU project- Underwrite mid-term and short-term upside cases as well. 

However, he didn't include repairs, property management, CapEx, PMI, misc., etc., so the $3-400 'cashflow' would probably be closer to $0 or a loss on the property they were analyzing. 

Monthly cashflow does not account for vacancy, repair, cap ex.