The "50% rule" states that one can expect expenses on a long term average to total to roughly 50% of fair market rent, where the expenses include property management fees and capital improvements also but exclude principal and interest payments; principal and interest payments come out of the other half of the rent, and whatever remains is the net cash flow (if any remains).

From the things that are required on their applications, you may get additional ideas on what to require or exclude.  

If it was in inspection report it should've been dealt with at the time.2) Mold claims (first assuming there's evidence of mold) are excluded from coverage in many areas/policies.

After PITI and HOA's, I am only cash flowing $145 per month (excluding cap ex, vacancy, ect.) - so my real cash flow is close to zero.

@Chris Laughary, It doesn't necessarily exclude the 1031 entirely. 

However, if you choose the latter, the encroachment and any other matters that a proper survey would disclose would be excluded from coverage. 

If you do truly have a non recourse provision in your note (in rem) you have no need to counter sue, just defend the suit, to some degree, making sure any judgment excludes any deficiency judgment language.

I have read all the forum post related to foreclosures that I can find on here, and I guess I wanted to check my process and invite anyone else to give me advice.The recommendations I have been given/ read most frequently are:Have a title report performed as close to the date of sale as possible (2-3 days depending on how long your title company needs) Try to find a title company that is willing to sell you title insurance after a judicial foreclosure.Perform extra searches yourself for any items that are excluded from the title report.Calculate the expected value based on the best comps.Drive by the property to get an idea of current condition.

For this I would nicely tell her excluded pets includes any visiting pets.

If yes, 1) You do not have to exclude the portion of the house for the capital gain.