The structure should reflect that risk allocation.

Cap gains tax, 15-20%, will be due upon the portion of principle received allocated as gain, as received.  

It is all about time management and how you allocate your money.

Since I purchased the property for a steep discount I have the ability to convert the units and allocate the build out of the additional room.

Sweet, thanks @John Woodrich, that makes a lot more sense to me now.It seems to me that CapEx would be extremely dependent upon the property itself, since it varies widely due to the health of the subject property in question, and it would be best to do it by evaluating each of the major systems and allocating a monthly replacement amount for each,Repairs and maintenance seems like one you could definitely get away with a percentage, though it would still need to take into account the general health of the property.Thanks again!

There is no set, standardized amount one allocates to allowance.  

Reserves would then be allocated for projects or initial cap ex budget to remedy deferred maintenance.  

That 85 can be allocated however you want in the next purchases.  

Here are the three books I recommend: A Random Walk Down Wall Street - Burton Malkiel The Intelligent Asset Allocator - William Bernstein The Intelligent Investor -Benjamin GrahamReal estate investors love the scrappy intuitive nature of managing rentals.

Use the 50% rule, which is a more realistic estimate of expenses, and try for positive cash flow after allocating 50% of rent for expenses.