I also have language in that addendum that defines who has what responsibility for maintenance, repair, limits of expenditure based on features of appliance and cost to repair. 

Also, I didn't see any mention of capital expenditures/repairs & maintenance so don't forget about budgeting for those. 

For what it's worth, my takeaway from the article wasn't whether to save or invest in stocks (or whatever investment vehicle) the only money that you have set aside for medical bills, reserves on properties to cover repairs/capital expenditures, or any other living expenses or necessities that may come up in our personal lives or businesses.  

@Matthew ReumI’m also new to REI but I think that what he means is “capital expenditures” which (correct me if I'm wrong) include new roof, new water heater, and other BIG expenses that don't happen every month.  

We'll see if that goes anywhere.My back up plan is the same as my primary plan: keep buying property in markets that have a diverse economic base, in an underserved market (i.e. upper end of low income/bottom end of middle income rentals, small commercial properties), for around 70%-80% of what I could sell it for today, and using the 2% rule of rent to purchase price ratio to ensure there is plenty of cash flow where I can handle vacancies, maintenance, capital expenditures, and still cash flow positive.Cars crash far more often than markets, but you still drive, right?

If you at least factored in another 5% for Capital Expenditures (which I still feel is low) then maybe you can get by with 5% for repairs, but you currently have no money being set aside for big expenses like roofs, water heaters, furnaces/ boilers, siding, any paving etc..

Hi @Victoria Leon, there are lots of great resources out there for evaluating single family rentals, here are a quick few that I think would be great paces to start:This video tutorial on estimating cash flow: https://www.biggerpockets.com/…This blog post on making sure the numbers make sense: https://www.biggerpockets.com/…I also find this guide to estimating capital expenditures very helpful: https://www.biggerpockets.com/…You'll find lots more great content if you search the BiggerPockets blog.Good luck!

You want to be sure to also figure in allowances for taxes, insurance, vacancies, repairs, and capital expenditures as well.  

one water heater replacement blows your cash flow for almost an entire year (although maybe you've accounted generously for capital expenditures like this). 

Expenditure) leaving about $325/mo cash flow.