To me, it doesn't seem $78/month is worth the headache/s of a tenant and as many of you have stated it isn't enough cushion to help when crap happens.

Potential appreciation or profit is not enough of a cushion, even at 30% ARV.

As long as you can acquire with a margin of safety and each property carry its own the debt service with a cushion, you can say F.U. to whatever the market does.

(Hard to gauge but a rough idea won't leave you high and dry when they put a new roof on)As a new investor, I think building yourself that cushion is a wise decision.

I exercise first thing in the morning, eat the same thing for breakfast and lunch each day, have a modest/simple wardrobe, cycled through multiple 3rd party managers to find one that I could live with, consolidated to only two properties (this is important...focus on profit per property, not per door), buy value adds (once again, more profit per property...plus I can screw it up and still do okay...lots of cushion), and work through trial, error, and then success in your routine.REI (and life) is not linear. 

In addition, when the market turns, you'll sleep a little easier knowing you have an equity cushion vs being upside down in a property that you can't give away?

Mostly when unexpected expenses hit and you are a little short.Well put :D Having a cushion of operating funds is important.

I think it was a lot more achievable after the big crash.The better your marketing and more willing you are to look for value add the closer you can get to 2%.I also think the 2% rule was based in a time period where the cost of financing was much higher so you needed that cushion in order to cash flow.If after financing, taxes, insurance, and a healthy cushion for expenses you can get worthwhile cash flow and an acceptable rate of return than you shouldn't be too concerned about the price to rent ratio.

It shouldn't be a problem if you know your rehab costs well and you're giving yourself some "oops" cushion when you run your numbers. 

The same generation saying they don't want to pay for someone else's education also went to college for <$10k and came out making 6-12x their debt load....now a doctor graduates with $180k+ in debt and is lucky if their 1st year's income is 1:1 with their debt load....but, I'll stop rambling about higher education costs - it's a racket.I like the idea of refinancing the duplex - at a low rate 3.5-4.5% - paying off the student loan debt (if you are a high income earner their won't be any tax break for student loan interest, but you would get the mortgage interest break) and then look to invest some of the $70k into another property while maintaining a nice cushion for personal or RE related emergencies.Good luck!