Which approach is given the most weight is based on, among other factors, the purpose of the appraisal.

I only have 2 rental units, so my response probably doesn't carry much weight, but I'm in the 'keep more in reserve than you could ever possibly need".My reserve is in my personal accounts, my rental accounts have very little excess since I've not been at it that long.Regardless of where the funds are, if I don't have enough liquid assets to carry me for a year at the very minimum (business and personal) then I'm not fun to be around.I err on the overly cautious side.

A few examples off the top of my head are prices ending in 999 or 444, houses with the number 7 in the address, phrasing when listing a property and the corresponding sale price, etc.I think these are fun things to look at but I don't think they should carry too much weight when it comes to acquisitions, although they are definitely signs of a more affluent and stable neighborhood...just my .02

Our support documents alone are worth their weight in gold.

For grins you can use 20% to start with and adjust this north to be more conservative to allow for a lower starting offerYOUR capitalization rate will be based on weighting the two components above based on the terms driven by the lender.

But I think I would weigh the risk/benefit ratio against the more frivolous scenarios and take the catastrophic scenarios out of the equation, or at least give them very little weight.

Instead of your business putting all of the profits back into itself, it needs to start paying you for your time, which in turn goes into the household to take some of the weight off of her. 

So like all these markets  LOCATION is paramount you simply cant buy based on return numbers or price points.. the take away here is buy the best you can not the houses that look best on paper.. a 5 or 6% return that you actually get on these rentals over time without major issues with tenants needs to be weighted with the " My Criteria says I need to make 9 to 12% return) which turns out many times like what your describing above basically no return or negative returns with little hope to right the ship for many years to come. 

Large format tile is around $2-3/sq foot in my area, make sure you get the LFT mortar if doing the walls, and do your installer a favor and get the lightest weight tile you can- 6x24 planks may be better than 12x24 for installation.

A good mentor is worth their weight in gold.