Since I am interested in long term buy and hold, I feel in 20 years or so, there will inevitably be cap expenditures and if I don't obtain a property that meets 1%, I may not be able to pay all the expenses in the future. 

One thought I have is that you account for 10% for repairs but I would also strongly suggest that you account for 10% for capital expenditures.

I'm no idiot and I completely understand how to value commercial properties including capital expenditures that have to be factored in at the time of purchase.

You'll also want to allow for a higher than normal capital expenditure reserve due to the older building components (unless you do major rehab up front).

Or just save ALL your so-called Cash flow on the single family rental and expect to spend it on the Capital Expenditures that WILL come up.  

How about setting funds aside for vacancy, maintenance and capital expenditures?

It would truely be a fairy tale world to have zero vacancy and maintenance over time :-)In the Mentoring programs we put together the individual plan needed depending on your planned hold time 1 year is very different from 10 years as Joel discusses above.In Multifamily the key is knowing your operational costs and raising enough funds up front to make sure all maintenance and capital expenditure budgets are conservative (meaning over funded) and that this all works with the real numbers based on what you are capable of doing with the property. again, Joel is right on target.Often buyers of both single family and multifamily forget the importance of on-going skillful operations.

Have you included: Vacancy allowance; Maintenance costs; Capital expenditures; and Property Management costs, somewhere?

Here are the  IRS regulations that will answer your questions whether to capitalize or expense certain expenditure. 

The only concern I can see is expenditures continue to outpace revenues due to increases in salaries and pension costs.