The roof is at the end of its life so in the next year or two we will have to spend another $8,000+ on a new one.

How old are the furnace, A/C, roof, etc.? 

It was not an easy one, since we are in CA and the property is in OH, but we made it through and are looking to take on our next project.Bought: $79,900Initial budget: $65,000Real budget: $97,000 (mismanaged project by initial contractor (and second contractor))ARV: $219,900Improvements:Brand new siding on the second floor (was not in the initial budget)New roof (was not in the initial budget)Sealed and painted the basement - was quite creepy down there beforeOpened the floor plan from the living to the kitchen by widening an existing walkwayMoved the kitchen from one side of the house to the other to capitalize on the stained glass windowsGutted the upstairs bathroom and added really good looking featuresAdded a half bathroom and laundry room downstairs by the entry to the backyardNew ACNew plumbingNew electricOur contractor performed extremely poorly on this job, and I am happy to share a cautious word with anyone who aims to invest in Cincinnati about the team at Kaiker Development and Creative Customs Carpentry.

A roof or major mechanical replacement is not all the sudden less because the property costs less, so the % marker gets majorly skewed.When you inspect the actual property you will have a better idea of what to have set aside for Cap Ex and other reserves like repairs and vacancy.  

One bad tenant or an unexpected roof leak can decimate your return.2) The biggest determinate of an investment's success is property manager (also referred to as operator).

Here are the details45+ year old housenew a/c (6 years ago)New roof (last year)New electrical panel (6 years ago)New plumbing (this year) mostly new appliances (oven is old)New floors in about 60% of the houseThe numbers:Currently on a 30 year loan with 3.8% int.monthly payment is $1250Avg rent Comps are $1600 to $1800If I apply the 50% rule then it does not work, but taking into consideration that the main money drivers have been addressed would I still be in good shape if make the decision to not set aside as much for the expenses. does this make sense?

You have to gauge what the market will be willing to pay for.Some things that you didn't mention... the roof looks rough in the front.

It was her fault (although accidental) & it needed immediate repair to prevent further damage from occurring (ie, pipe broken by shoving a metal storage rack into the sink cabinet). 

Roof was replaced 5 years ago and looks nice. 3 of the 4 water heaters are under 2 years old.

When it comes to reserves, I dont use percentages for capex, I use real dollars, based on the age and life expectancy of large items (roof, hvac, water heater, and a buffer for other items).