A common rule of thumb is to budget around 1-2% of the property's value annually for maintenance.Management Fees: If you plan to hire a property manager or use a property management service, factor in their fees as part of your operating costs.Contingency Fund: Always include a contingency fund in your budget to account for unexpected expenses or fluctuations in operating costs.Financial Modeling Tools: Consider using financial modeling tools or spreadsheets designed for real estate investment analysis.

In this scenario, it would be foolish to save up 20-25% down on a cheap investment property on a DSCR loan.

@Chris Depalma-- that's a good and common question.To rephrase your question, it might be better to ask, "How can I buy at 25% less than appraised value?"

Yea you will need a bridge loan on this scenario.

My current project is a similar scenario - needs a lot of work (+ money for renovation), and I'm turning the basement into a separate unit in order to increase the monthly rental income.

The best thing to do is call a few local lenders in your area and explain what you are looking to do and ask what options are available for that scenario. 

There maybe some misunderstanding, being a short term rental property owner that will be self managing the daily operations, I’ve learned that in this scenario I would need to count at least some of the time spent setting up the property to pass one of the material participation tests.

Real Estate is definitely not just a "numbers analysis" and you are definitely thinking about things the right way - but I think a good next step for you would be to spend some time putting a lot of this stuff into a (very) basic financial model/spreadsheets mapping out all the potential costs and estimates on effect (effect on value, on exit, different scenarios) - I think getting started with that framework should help with these decisions immensely

Especially when they work commonly with each other.

I wonder if 10% is so commonly used because people are looking at 10 yr time frames and not 30+?