I am looking to transition to a PM for certain aspects.

The more units you can achieve under one roof the better off your are.

So for example... if you need a new roof which costs $20K a 'replacement value' policy would cover it all however, an 'actual cash value' policy would perhaps determine that the roof was 10 years old and so you might only get $10K and you would have figure out the rest on your own. 

The rest I would consider maintenance and upkeep regardless of how I claimed them tax-wise (i.e. faucet= maintenance expense, new roof= capital improvement).

The foundation looks good and the roof is intact.

However, my girlfriend and I decided to upgrade few aspects (namely kitchen since she loves cooking) of the front house since we were going to live in it for the next few years.

It is always best to standardise all aspects of business.

That can’t be undone and is emotional for many people as they age.Also from a financial standpoint this property will not cash flow so you will lose money if problems arise with the property such as needing a new roof, plumbing problems, etc.

If they decide to install a new roof on the house, but only get through the demo phase, and quit before a giant monsoon, etc. how am I protecting this down side?

They capture uncertainty around purchase price, the rehab costs, the rental cash flow (above), and the refinancing.To get complicated, you can use Bernoulli variables to model the likelihood of a binary result (if a tenant will leave in a specific year, if the zoning board will approve a particular project etc) and account for that in the cost.I mentioned above that I don’t model the SEQUENCE of major repair events and whether that major roof repair will happen in a given year (but you can using Bernoulli variables if you wanted)… Instead I account for that next major roof repair by setting aside reserves and maintenance funds.