I seem to remember her saying something like home office expenditure is an audit red flag as well.

Those are attractive numbers, and I know a good property manager who could handle things on the tenant side, but I am concerned about getting hit with big Capex expenditures on a property that's not worth it.

I can show development expenditures including hiring an architect, obtaining an asbestos survey and soil boring reports. 2.  

Capital expenditures are made to improve your business.

If you are valuating SFR's focus on  other long-term plays like debt pay-down, equity, and tax benefits...Not discouraging your valuation..practice helps...but your vacancy loss is pre-determined as a component of GOI...it's not an operating expense...and capital expenditures are what they are...again, not an operating expense (and 15% may be excessive...).PM me or feed me a couple of your property addresses and financials and I'd be glad to help you sort these out. 

what are the planned capital; expenditures for the development?

Plan to use the money for capital expenditures and rental income for 2 properties, and strict uncollected rental income for a third.

When you take in consideration Capital Expenditures and that you will be covering all utilities, the overall financial picture may be less than your initial analysis.

Remember that single family homes and smaller multi's are appraised based on comps - and comps don't take into considerations the capital expenditures you put into the home.

When doing the numbers for calculating cash flow, remember to account for vacancies, capital expenditures, and maintenance.