If they damage the property, you pretty much have to eat the cost.

Or should I wait for more appreciation and hope increasing rates don't eat into my profits?

Your point of keeping the last month's rent at it's original amount and eat the difference is interesting, as far as I know other landlords in my areas are requiring the last month's rent gap to be paid although some kept the SD the same. 

But deducible is 5k.. so I had a roof in Dallas it cost me 5k to replace it was a 14k job... if I was a buy and holder and making 200 a month... that eats up 2 years cash flow.. so that's why I am of the mind in hail prone areas one needs to look at this carefully..

Lastly, if you don't need to "flip to eat" because you have a career path you're on, take your time.

Sure you could have great cash flow for several years, but one big capital expense would eat up many years of positive cash flow. 

So, you shift money in your operating accounts.Payoff the little old lady who is calling her attorney.Now the XYZ is about ready but you're short.Hey, you'll get all the money later, you have to pay your house payment and eat, continue operations with your investor parties or you'll die on the vine.Well, XYZ falls through, time to pay all the pipers.Wooops, and you say you're from the FBI, what is this all about?

@Kenneth LaVoie, over any extended period, of course capex will eat up some portion of your income - so likewise, SHOULD be anticipated in advance by apportioning it monthly - just like any other expense! 

So I would live, eat, and breathe real estate, and find a mentor where you can learn the ins and outs of this business.

If for some reason the rehab gets hung up and you can't get it rented right away, you have to be prepared to eat the monthly payments.