Not to get too nerdy on it, but its also a tax deduction, so you get it financed, your tenant pays for it, and you owe less in taxes, so replacing items could increase your net income/revenue.

Do you focus on paying the lowest premium possible, even if deductibles are very high?

In Cali, which is a very tenant friendly state, you must return the security deposit to tenant within 21 days with copies of receipts showing repairs done in order to take the deduction.

Repairs are expensed and deducted in the current tax year, whereas improvements are capitalized and depreciated over time.

Thus, your only paying your deductible.

If not X amount will be deductible from the deposit. 

I'm not sure if using heloc for investment property improvement is a tax deductible event.

Here is what I have come up with.RENT SCENARIO:After deducting umbrella insurance and our current mortgage at a 3.25% interest rate we would have cash flow of $1697 a month.

I am assuming you are talking about IRS rules regarding the tax deductions.

I live in SA and there are really good triplexes and fourplexes you can get into and cash flow about $1500 a month with everything deducted.