Older homes typically will have higher capital expenditures, but if a home is well taken care of you can do well on them.

Cashflow is Rent minus mortgage payment minus expenses.Expenses like taxes, insurance, property management, and you have factor in capital expenditure (capex), vacancy and repairs & maintenance.

. $200 a month, multiplied by 12 months = $2,400 $2,400 multiplied by 4 years = $9,600We can use the $9,600 to buy another duplex once she graduates and makes income again.The goal is to use duplex income to pay off all of her student loans.Our deal analysis is just like how BP teaches:Cash flow has to be >$200 a unit after ALL expenses and Cash on Cash return has to be >12%Expenses-Principal & Interest-Property Taxes-PMI-Home Insurance-Water/Sewer-Garbage-Vacancy 5%-12%-Repairs & Maintenance 5%-10%-Capital Expenditures 5%-1-%-Management fees 0% (I will manage all of our properties now & moving forward)We are 3 weeks in on the Duplex search in New Haven we are learning QUICK that cash flow and a FHA loan do NOT get along.

Positives of the House: Amazing updated high end kitchen all stainless steel appliancesNew RoofCan lighting in all bedrooms, living room, and kitchenHigh End basement bathroom includes Jets in shower wall and Heated tile floorNew Central ACNew FurnaceNew HVAC ducting throughoutNewer Vinyl SidingNewer guttersMany newer vinyl windowsNewly wired for gigabit speed ethernet in all roomsOpen cell insulation on second floor roof (solves all cape cod style home problems with ice damming)Nice landscaping both in front and in backGreat curb appealFenced in LotFull BasementOpen concept living roomVery low taxes compared to rest of Lake County IllinoisFinished will have 2 full baths, 3 bedroomsNew copper plumbingNew Natural Gas pipingAll Capital Expenditures are taken care of!

@Hae-Yuan Chang here is a BP Blog post that explains CAPEX reserves. https://www.biggerpockets.com/renewsblog/2015/10/13/real-estate-capex-estimate-capital-expenditures/You should also budget a minimum of $500 per year for routine or emergency maintenance.  

Does your cash flow analysis include capital expenditures? 

It will help you get a handle on some of the things you want to make sure you take into account when analyzing a deal like capital expenditures, vacancy and property management. 

The house looks promising from an investment perspective - or at least as promising as it can be in this seller's market where most houses sell for prices where the rent is barely large enough to cover all foreseen expenses, let alone leave you with a steady cash-flow, profit.This one looks like it will allow us to get some decent cash-flow after all expenses, fixed and anticipated (including capital expenditures, vacancy etc) are accounted for. 

On top of this, estimated $3000 capital expenditures / year.

I've c/p'd the gist of the numbers below: Property Specific Inputs Offer Price $ 90,000.00 After Repair Value $ 90,000.00 Rehab/Repair Costs $ 5,000.00 Annual Tax $ 2,315.00 Monthly Insurance $ 100.00  Cash Needed Acquisition Costs $ 26,720.00   Holding Costs $ 692.74   Refinance Costs $ -   Total Cash Needed $ 27,412.74           Rental Income Gross Rental Income 1.94% $ 1,750.00 Operating Cost Assumptions Vacancy Rate 8.0% $ 140.00 Maintenance 9.0% $ 157.50 Capital Expenditures 9.0% $ 157.50 Property Management 10.0% $ 175.00 Total 36.0% $ 630.00 Owner Paid Utilities Electric/Gas ($/month) 8.6% $ 150.00 Water/Sewer ($/month) 11.4% $ 200.00 Trash ($/month) 0.0% $ - Total 20.0% $ 350.00         Cash Flow Calculations   PITI $ 692.74   NOI $ 770.00   Monthly Cash Flow $ 77.26 Net Cash for Deal $ (27,412.74)   Cash on Cash Return 3.38%